The June 2007 issue of Money Magazine arrived in my mailbox several days ago, but I didn’t have time to even glance at it as we were in the middle of house hunting. Last night, I had the opportunity to sit down with the latest issue – here were the top ten things I found of interest to me.
Do a home inventory. If you own any appliances or other items, you should have an extremely thorough home inventory, including makes, models, serial numbers, and so on. Even as a renter, I’ve done a very detailed inventory and I store a copy off-site – when I own a home and have a lot of appliances and furniture, I’ll probably be neurotic. (p. 24)
The Ford Fusion and Mercury Milan are basically identical except for the logo. Why pay $800 more for the Mercury? A similar dichotomy occurs between the Ford Taurus and the Mercury Sable. Don’t buy the more expensive version. (p. 26)
If your parents are getting older, have a heart-to-heart with them about their finances. Make sure they’re in good financial shape, make sure their estate is planned, and make sure they’re not slipping up and making big financial errors. Just sit down with them and talk. (p. 36)
Have a conversation with your spouse about spending. There’s a semi-humorous guide to this serious topic, but the fundamental points are really solid: be willing to compromise, be willing to give up some of your own spending, and make lists together of the things you’re willing to cut out. (p. 43)
The Citi Driver’s Edge Platinum Select MasterCard rocks. I’ve talked about this card a time or two, but Money points it out again. If you drive much to work (and I commute more than ten miles each way every weekday), the benefits on this card can really add up. I think there’s a good chance that I will move to this card as my primary card after we make the house move. (p. 46)
Compare your investment portfolio to a standard index fund portfolio. If your returns aren’t beating comparable funds from Vanguard, why are you sticking with your current mutual funds? The same goes for individual stocks that you’ve held for a while – if they’re not matching a standard index fund, what are you doing? Broad-based index funds make a great benchmark. (p. 47)
Most money market funds are not FDIC insured, so if the companies default, you get nothing. You can get as high as 6.2% or so in a money market account, but they’re often invested in bonds that are shaky investments. This article gives an example of a money market account that is invested in Ford bonds with a pretty poor bond rating because Ford is in such a precarious financial position. If Ford implodes, then the money in that account is gone for good. (p. 66)
How can you get an 18% (or so) return with no risk on a $5,000 investment? Pay off your credit card debt. If you carry forward credit card debt while also investing in other things, you’re inexplicably choosing to lose money. (p. 78)
Don’t lend money to family or friends. 43% of family loans aren’t repaid and 68% of people who give loans to family members or friends wind up regretting it. Just avoid the bad feelings and adopt a no-loan policy. (p. 102 and 104)
Quote of the month:
The only way to be assured of higher expected return is to own the entire market portfolio.
– Bill Sharpe, Nobel Prize winner in economics (p. 107)