Comments on: Money Magazine – June 2007

By: Judith

Judith — Mon, 21 May 2007 19:12:07 +0000

Robert’s rule [Don't loan money you would not be willing to GIVE]is a very good one, and one we have used in my family more than once. That way, you are pleasantly surprised if the “gift” gets paid back.
Also, about the Fusion/Milan thing: we did get a Milan recently because the price for the 5 program cars on the lot, 4 Fusions and a Milan, was the same — and the Milan had many more safety features, better seats, somewhat lower mileage, etc. IMHO, program cars are the way to go.

By: Robert

Robert — Mon, 21 May 2007 13:10:34 +0000

When ‘lending’ money to friends or family, I go by this rule:

“Don’t lend money that you would not be willing to GIVE the person.”

By: Leslie M-B

Leslie M-B — Sun, 20 May 2007 05:34:14 +0000

All good information. Thanks!

Except I would add: Don’t buy a Mercury Sable ever. Our experience: four transmissions before 40,000 miles. :)

By: MossySF

MossySF — Sat, 19 May 2007 09:17:38 +0000

(previous comment cutoff due to < char)

The remaining 20% is in <90-day commercial paper/short term bonds with credit ratings of 30% AAA, 65% AA, 5% A.

The real bang is the various tax exempt options. A CA resident in the 35%/9.3% tax bracket would get an pre-tax equivalent compound yield of 6.77% even though the payout is only 3.77%. 100% holdings for this MMF are rated *ABOVE* AAA (these are ultra-short-term AA/AAA bonds with added default insurance).

By: MossySF

MossySF — Sat, 19 May 2007 09:15:30 +0000

Trent, you should re-read the money market article and analyze carefully. MMFs (Funds) and MMAs (Accounts) are totally different things. MMFs are mutual funds and must follow SEC rules for that class of investment. MMA is an arbitrary label any bank/company can call their accounts.

SEC rules say MMF holdings must be in the top two credit tiers and cannot exceed 90-days in maturity. Hence, they do not hold shakey bonds because it’s against the law. Googling up Ford + Money Market, MMFs have been excluding from buying Ford bonds since 2001.

This is the reason why Ford offers their own direct “money market account”. I can only guess the contents of the article but from looking at the quoted 6.2% number (which is way higher than any real MMF), I will say Money magazine is talking about Ford’s specific MMA implementation — not MMFs in general.

The highest retail taxable compound yield MMF is Vanguard at 5.24%. 80% of holdings are backed in some way by the US Government (FDIC CDs, US Treasuries, etc). The remaining 20% is in

By: Dan

Dan — Sat, 19 May 2007 09:06:50 +0000

Most money market funds are very safe. Fund managers will move heaven and earth to avoid “breaking the buck” and causing a loss of investor principle. As far as I can find, there has only instance of this happening, and it was an institutional fund which became ensnared in derivative holdings (http://biz.yahoo.com/edu/bi/ir_bi2.ir.html).

Of course, if you go out and put all your money into junk-grade corporate bonds issued by one company (Ford in this case, apparently), you’re obviously exposing yourself to high levels of risk. Consequently, when looking for a safe investment, money market funds such as those available through Vanguard (VMMXX, etc), which own a range of high-quality credit, are a much more reasonable choice.

By: Viva

Viva — Sat, 19 May 2007 08:33:47 +0000

Is the home inventory for insurance reasons?

I rent and it’s never occurred to me to find out what the serial numbers of the appliances are–but they belong to the landlords, not me. And I don’t have insurance.

By: HamiHarri

HamiHarri — Sat, 19 May 2007 05:56:57 +0000

I can vouch for the not lending money to family and friends. Does the “I’ll get the next dinner” count as lending? Unless it is clearly someone’s treat – pay your own breakfast/dinner/lunch bills!!! And a $20 breakfast bill doesn’t compare to a $200 dinner bill!!! Do I sound bitter?

By: Trent

Trent — Sat, 19 May 2007 01:04:38 +0000

Thanks for catching the typo, Jim. They seemed extremely peevish on the Ford money market at least. I don’t know about the long-term history of them, but I do know as an individual I would be really scared to buy bonds in a company like Ford right now and that’s effectively what the account is buying.

By: Jim Lippard

Jim Lippard — Fri, 18 May 2007 23:37:17 +0000

“Most mutual market funds are not FDIC insured …”

Did you mean “money market funds”?

Is there a case of a money market fund that has ever lost principal? I know there are cases of some that *would* have lost money, but the companies providing them covered the losses to avoid loss of consumer confidence.

As of last year, Money magazine was still saying that no investor had ever lost principal in a money market fund.

By: Dy (www.dyphan.com)

Dy (www.dyphan.com) — Fri, 18 May 2007 22:58:03 +0000

Hmm interesting post. Maybe I should do this with my subscription to Kiplinger’s

By: Getzly

Getzly — Fri, 18 May 2007 22:05:04 +0000

#2: A better question is why pay for a Ford or Mercury?

By: Rick

Rick — Fri, 18 May 2007 21:52:24 +0000

Regarding the “investment” by paying off one’s credit card debt, I actually have a Chase credit card that is fixed at 5.9%. I don’t carry a balance, but if I did, I would definitely use this one. In fact, it’s almost low enough to carry a balance and invest the difference at a higher rate.

By: Tim

Tim — Fri, 18 May 2007 21:15:41 +0000

given that we move alot, we take a video of all our stuff and have a running list of serial numbers for high value items. we copy the video onto a dvd and store in safety deposit box. a video helps you remember and shows actual documentation.