Joint accounts
What will happen to your credit score when you get married?
By Lew Sichelman
Last Update: 7:33 PM ET Sep 27, 2007
WASHINGTON (MarketWatch) -- Question: I was wondering what will happen to my credit score after my boyfriend and I get married. We both have bad credit and we have been working on repairing mine first because it isn't as bad and will repair sooner. We would love to buy our first home, but I am curious: If we get married, does "his" score become "our" score and all the repair to mine won't matter much?
When we do buy a home, will his credit need to be considered as well as mine because we are married or can I apply for the loan separately? Tracey (and Ben)
Answer: The short answer is no, your credit scores remain separate once you are married. That's the good news.
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The troubling news, at least in your case, arises when you choose to mingle accounts and apply for joint credit and loans. In these cases, says Eric Lindeen of Zoot Enterprises, a Bozeman, Mont., firm which provides financial-services companies with instant credit "decisioning" and loan origination systems, both credit scores are taken into consideration.
Consequently, you need to weigh the pros and cons of a joint application. In some cases, you may end up paying a higher interest rate or receive less money than you would had you applied for a mortgage on your own, depending upon the severity of damage contained in both credit reports.
If you choose to apply for the home loan separately, Lindeen says, your husband's credit history legally cannot be taken into account unless you are relying on his income to assist with getting the loan and paying the bills.
But if you live in a community property state -- including Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas and Washington -- information regarding your spouse may be requested. Your spouse also may be required to sign a waiver in these states.
Lindeen also advises that in all cases, it is important to check the type of loan that you are applying for to see if the bank will take your spouse's credit history into account when making the decision.
"In general, if you apply for a loan separately, your credit is the one that will be considered when assessing the risk," he says. "Although applying jointly can help repair your spouse's credit by providing positive payment information, you will be assuming full responsibility for those debts. Bankruptcy is much more difficult today, and certain loan types, such as student loans, are not dismissed in a bankruptcy."
It is important to note that when repairing damage to your credit, focus on reputable methods versus a quick fix that may not serve you well. The first step to repairing credit is to stop accumulating debt. Reputable means of repairing your credit also include paying off your debt, making sure delinquent accounts are brought current, checking your credit report for errors, not applying for more credit and decreasing your "open to buy" credit limits.
Be cautious of companies that promise to fix your credit fast by cleaning up your credit report and claim they can convince creditors that you don't owe the debt, Lindeen warns.
"Lenders look for indications of unscrupulous repairs and will adjust your score appropriately. If it sounds too good to be true, it probably is. There isn't a quick solution to repairing credit."
Feedback
More than a few readers have said the advice offered in my response about the impact on your credit score by paying off old debt was incorrect. Actually, it was the advice of Ron Litt, president of Market Kinetix in Houston, but others have told me the same thing. And now, it seems, we're all wrong. See previous Realty Q&A.
"Paying any amount on an old past due account does not reset the seven-year reporting clock," commented Michael Bovee of the Consumer Recovery Network. "It is unfortunate that there are so many misconceptions on this issue. Consumers need the facts so that they can map and plan for their future."
Bovee says the only way an account can be "re-aged" is by the original credit grantor and even then only if the account has been "brought current." "If a furnisher of information to the credit-reporting agencies were to do as your quote suggests, it would be a violation of the Fair Credit Reporting Act. Admittedly this happens far too often. Exposing the practice is what needs to be addressed, not legitimizing it."
According to reader Nancy Nihart, the purge date and seven-year rule draw from the original delinquency date that lead up to the collection or charge off. "Paying the debit does not change the original delinquency date, only the last activity date," Nihart reports.
Moreover, she assures that if a debit is sold to a collection agency or other company, the original delinquency date cannot be changed to keep it on your credit report longer.
Friday, September 28, 2007
Wednesday, September 26, 2007
Stock Values
Life Time Fitness looks pretty healthy
Q: What do you think of Life Time Fitness (LTM) for an investor looking for slow but predictable growth?
A: Life Time Fitness is trying to help you and your family fit into your jeans.
The Minnesota-based company was running about 60 sports and athletic fitness center in 13 states as of February. Life Time Fitness is trying to be more than just a gym filled with rows of treadmills and exercise bikes. Many of its centers have swimming pools with slides, basketball courts, childcare centers, spas, climbing walls and other fun and active things for the family to do. It's a interesting idea. Rather than take the kids to a pizza parlor or bowling alley, you could, in theory take them to a Life Time Fitness center where they could play in the pool, or take classes in hip-hop dancing, basketball, karate, yoga and even Spanish.
Investors seem to think it's a good idea, too. Shares of Life Time Fitness have gained 23% this year through mid-September, during which time the Standard & Poor's 500 rose just 7.1%.
But is this the stock that will put your portfolio into good health? To find out, we'll put it through the paces and subject the stock to the four Ask Matt steps:
Step 1: Risk versus reward. When you take a risk on a stock, you want to make sure you're properly rewarded. So we download Corning's trading history back to 2004. During that time, the company generated an average annual compound rate of return of 33%. That is exceptional, and well above the return of the Standard & Poor's 500 during the same period.
And to get that return, you accepted relatively moderate risk of 12.8 percentage points.
This stock's volatility has been pretty average and the returns have been outstanding. So far, this stock looks to fit your criteria and probably explains why you own it. There's just one giant caveat. We're basing this analysis on just three years of data which is not even close to being an adequate sample size. Many think you need at least 20 years of data before this analysis is meaningful.
Step 2: Measure the stock's discounted cash flow. Some investors decide if a stock is pricey by comparing its current stock price to the present value of its expected cash flows. It's a complicated analysis made simple with a system from NewConstructs. When we run the stock, though, it's not available in the NewConstructs database currently. The company doesn't have adequate data available.
So, instead, we'll use this Discounted Cash Flow Calculator from MoneyChimp. You can enter the company's earnings per share over the past 12 months, which was $1.57. Next, you enter the stock's expected growth rate over the next five years of 25%. Lastly, enter an 5% annual growth rate in year six and beyond and a 10% return available from the Standard & Poor's 500. Click the calculate button and the site says the stock is worth $74.18, making it look reasonable next to the current price of $60. You might try the same analysis using cash flow instead of earnings.
Step 3: Compare the current valuation to the historical range. You can see how a stock's price-to-earnings ratio (P-E) stacks up against its historical range to determine if it's a buy or not. BetterInvesting's Stock Selection Guide can help you. If the analysts are right and the company grows 25% a year the next five years, that would put the stock in the "buy" range.
Step 4: Check the company's financial health. Before investing in any company, you want to make sure it's in good financial shape. A quick way to check is running it through the USA TODAY Stock Meter. Life Time Fitness scores riskier than average 3.8 here. You can get a Stock Meter score for almost any stock by going to money.usatoday.com and putting the stock's ticker symbol or company name into the Get a Quote box.
My bottom line? If you were looking for a stock with the potential of providing steady and strong growth, you've certainly found it for now. It's hard to knock this stock based on the four things Ask Matt readers look for. My only caution, though, would be to remember this is an individual stock. Contrary to the last four years of trading history may indicate, individual stocks tend to be riskier than diversified baskets of stocks. If safety is your top concern, you might strongly consider adding a diversified investment to you portfolio to go along with your Life Time Fitness stock. If anything happens to disrupt this company's steady growth, you can expect investors to punish it severely. This is one of those stocks that's riskier than it appears.
Matt Krantz is a financial markets reporter at USA TODAY. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com.
Tuesday, September 25, 2007
Death's certain. Taxes? Avoidable
Inheritance tips: Death's certain. Taxes? Avoidable
By Mindy Fetterman, USA TODAY
Financial planners, estate planners and other experts often quote this statistic: 70% of all inheritances are frittered away in the first three years. Here are some things to consider if you plan to leave an inheritance or expect to get one:
IF YOU WANT TO GIVE MONEY: (Go to: If you expect to receive money)
Even if you don't have a huge estate, there are ways you can leave money to your family or others that can save you taxes and make a big difference in their lives. Many people give money while they're alive to reduce the size of their estates — and estate taxes.
•You can give some money each year.
Each person can give $12,000 a year to any person — a child, another relative or the milkman — without having to file a gift-tax return with the IRS. If you have several children, you can give $12,000 a year to each. A married couple can "bundle" their gifts to give a combined $24,000 to each child ($12,000 per spouse).
Over your lifetime, $1 million in gifts is excluded from gift taxes. But any amount you give over $12,000 to one person counts toward that $1 million.
Time gifts for impact: For instance, a married couple could give a child $24,000 in December and $24,000 in January, says Michael Yoshikami, president of YCMNET Advisors in Walnut Creek, Calif. "That's a good chunk of a down payment for a house," he says.
•You can bequeath money after death.
Each person also has a one-time exclusion of $2 million from estate taxes after they die (the $1 million above is part of this). Combined, a married couple has $4 million that's excluded from estate taxes. If you want your heirs to be able to take advantage of the growth in assets you give them — and you're not sure they'd invest it wisely themselves — you can set up a trust to hold onto the money for any period of time.
STORY: 'Giving while living' alters inheritances
If you leave $1 million using a will, the money would be paid soon after your death. By contrast, if you left it in a trust, it could grow to $2 million over time, doubling the amount your child could inherit without triggering estate taxes.
The $2 million exclusion is "a use-it-or-lose-it provision," says Richard Stone, CEO of Salient Wealth, a wealth management firm in San Rafael, Calif.
•You can pay for education.
If you want to pay education costs for your children, grandchildren or anyone else, you can fund a 529 plan or prepaid college fund. Money in such funds grows tax-free over time, and the proceeds are free of taxes — as long as the money is used to pay for education expenses.
You can make the maximum $12,000 per-person, per-year gift to a 529 plan, or "front load" your gifts by putting five years' of donations in at once.
"You can't make another gift for five years, but it means Grandpa and Grandma can give $120,000 upfront," Stone says. That money also comes right out of their estate, so no estate taxes are owed on it after they die. The student gets the gift tax-free.
You can pay for education or medical expenses outright as long as you write a check directly to the college or medical institution.
Don't give it first to the student or her parents. The check has to go to the school.
•You can set up a trust.
A trust is a way to bequeath money to your heirs beyond using a will. Families with as little as $300,000 to leave should consider a trust for their estate, Yoshikami suggests. That's enough money to make it worthwhile to pay the fees to set it up. Once life insurance, retirement savings and the rising value of real estate are combined, he says, many people have estates worth that much.
One advantage to a trust: It doesn't have to pass through probate court, as a will does. The amount and details of the trust don't become public, says Stone of Salient Wealth. And money or property in a trust stays with the intended person. It can't, for example, be mingled with other assets and divided in a divorce.
"A lot of families use them to protect money against creditors or a bad marriage," Stone says.
A trust isn't always for everything in your estate. Leaving an IRA in a trust, Yoshikami says, doesn't give the same tax advantages that leaving it to an individual does. "If you leave an IRA to an individual, they can choose to take the payout over years and earn more over time," he says.
There are many kinds of trusts, and tax implications, to consider. You should have a trust attorney or financial adviser help you decide which is best for you.
•You can open a private foundation.
"There's just something about the sound of 'The Eric L. Green Foundation,' " laughs Eric L. Green, an estate attorney at Convicer & Percy of Glastonbury, Conn.
Green says some families with as little as $500,000 extra — after retirement, college and lifestyle needs are met — set up a foundation to support a charity.
You can pay your child a salary to run the foundation, he says, or pay him to serve on the board. A foundation has to disperse only 5% of its assets each year.
"I've helped people set up foundations to advance poetry reading and to spread medical information in Africa," Green says. It will cost you about $2,500 to $5,000 to set up a small foundation; up to $50,000 for larger ones, he says.
"Wealthy families think it's good for their kids to have to work with a charity," he says. "They think it's better than throwing fancy cars and money at them."
IF YOU EXPECT TO RECEIVE MONEY (Go to: If you want to give money)
Try not to blow it right away.
"Most people act like they've just won the lottery," says Michael Yoshikami, a wealth manager in Walnut Creek, Calif. "They buy a boat or a motorcycle or put an addition onto the house. They just add to their financial obligations."
Not everyone who inherits money, or who gets money regularly from living relatives, is rich. Most are, but not everyone. And not every inheritance is large.
A typical scenario for a typical American who receives an inheritance might go something like this:
An elderly mother dies, her husband having died earlier. She leaves her son and daughter the family home, which has been paid for, and a Roth IRA worth about $100,000. She and her husband bought the house in 1960 for $50,000. Now, it's worth $300,000.
All of a sudden, her two boomer-aged kids have an "estate" worth nearly half a million dollars. What should they do to derive the most benefit from the money and avoid being hit with a big tax bill?
"It can be nerve-racking," says Greg Fernandez, a financial planner at Nations Capital Wealth Management in McLean, Va.
•When you get Mother's house
The best thing about inheriting a house is that you get a "step up" in the value of the house for tax purposes when you sell it.
"The tax basis completely starts on the date of death," Yoshikami says. In our example, if your mother gives you a house she bought for $50,000, you get to "step up" to its current value of $300,000. So if you sell it for $300,000, you wouldn't pay any taxes. It doesn't matter that the home originally was worth $50,000.
Still, selling the family home can be an "emotional moment," Yoshikami says. Some families just can't do it. They let a member of the family move in.
"You need to stand back and make a rational decision," he says. "But if you do make an emotional one, at least understand the financial consequences."
If you let a relative remain in the house, you should have him or her buy your share, Yoshikami says. Get an appraisal and split the value of the house as if it were being sold immediately. Your sibling would pay you for your half.
The best thing in most cases, Fernandez says, is to sell the house and divide the money among siblings. If you wait to sell, and the value of the home falls after your mother's death, just as many home values are dropping now, you would have a loss.
•What to do with a Roth IRA?
Inheriting an IRA can serve you well, as long as you make a couple of decisions by certain deadlines, Fernandez says. The rules are slightly different when inheriting a traditional IRA or a Roth IRA. Our example is for a Roth, from which money distributed is tax-free.
But for that to happen, the Roth IRA must have been in existence for at least five years. If it was a traditional IRA that was converted to a Roth IRA, the conversion must have occurred at least five years ago.
Beneficiaries who aren't the spouse of the deceased can take distributions two ways: over a lifetime or within five years.
The IRS assumes that you'll take distributions over your lifetime, but the first payment must come out of the account before Dec. 31 of the year after your mother's death, Fernandez says. If it doesn't, you'll default to the five-year payout plan.
That may be OK for you. You can choose how much to get in each of the five years — $50,000 one year, zero the next, $20,000 the third, etc. But you'll lose the ability to keep that money in an account that grows tax-deferred over time.
Remember: You can't roll over an inherited Roth IRA into your IRA. It must remain separate.
To take advantage of growth over time, you should choose to withdraw money over your estimated lifetime. (You'll use the IRS' life-expectancy tables to figure that out.) You'll get smaller annual amounts from the Roth IRA each year than if you took the five-year payout, but a much greater amount over your lifetime.
"We call that a stretch IRA, because you're stretching the payments out over your life," Fernandez says.
For a $100,000 Roth IRA that grows in value at 8% a year given out over nearly 20 years, a 43-year-old beneficiary could potentially withdraw more than $795,000 over his lifetime, Fernandez says. (That assumes he dies at 83.)
And he'd still have $61,000 left to give to his heirs.
By Mindy Fetterman, USA TODAY
Financial planners, estate planners and other experts often quote this statistic: 70% of all inheritances are frittered away in the first three years. Here are some things to consider if you plan to leave an inheritance or expect to get one:
IF YOU WANT TO GIVE MONEY: (Go to: If you expect to receive money)
Even if you don't have a huge estate, there are ways you can leave money to your family or others that can save you taxes and make a big difference in their lives. Many people give money while they're alive to reduce the size of their estates — and estate taxes.
•You can give some money each year.
Each person can give $12,000 a year to any person — a child, another relative or the milkman — without having to file a gift-tax return with the IRS. If you have several children, you can give $12,000 a year to each. A married couple can "bundle" their gifts to give a combined $24,000 to each child ($12,000 per spouse).
Over your lifetime, $1 million in gifts is excluded from gift taxes. But any amount you give over $12,000 to one person counts toward that $1 million.
Time gifts for impact: For instance, a married couple could give a child $24,000 in December and $24,000 in January, says Michael Yoshikami, president of YCMNET Advisors in Walnut Creek, Calif. "That's a good chunk of a down payment for a house," he says.
•You can bequeath money after death.
Each person also has a one-time exclusion of $2 million from estate taxes after they die (the $1 million above is part of this). Combined, a married couple has $4 million that's excluded from estate taxes. If you want your heirs to be able to take advantage of the growth in assets you give them — and you're not sure they'd invest it wisely themselves — you can set up a trust to hold onto the money for any period of time.
STORY: 'Giving while living' alters inheritances
If you leave $1 million using a will, the money would be paid soon after your death. By contrast, if you left it in a trust, it could grow to $2 million over time, doubling the amount your child could inherit without triggering estate taxes.
The $2 million exclusion is "a use-it-or-lose-it provision," says Richard Stone, CEO of Salient Wealth, a wealth management firm in San Rafael, Calif.
•You can pay for education.
If you want to pay education costs for your children, grandchildren or anyone else, you can fund a 529 plan or prepaid college fund. Money in such funds grows tax-free over time, and the proceeds are free of taxes — as long as the money is used to pay for education expenses.
You can make the maximum $12,000 per-person, per-year gift to a 529 plan, or "front load" your gifts by putting five years' of donations in at once.
"You can't make another gift for five years, but it means Grandpa and Grandma can give $120,000 upfront," Stone says. That money also comes right out of their estate, so no estate taxes are owed on it after they die. The student gets the gift tax-free.
You can pay for education or medical expenses outright as long as you write a check directly to the college or medical institution.
Don't give it first to the student or her parents. The check has to go to the school.
•You can set up a trust.
A trust is a way to bequeath money to your heirs beyond using a will. Families with as little as $300,000 to leave should consider a trust for their estate, Yoshikami suggests. That's enough money to make it worthwhile to pay the fees to set it up. Once life insurance, retirement savings and the rising value of real estate are combined, he says, many people have estates worth that much.
One advantage to a trust: It doesn't have to pass through probate court, as a will does. The amount and details of the trust don't become public, says Stone of Salient Wealth. And money or property in a trust stays with the intended person. It can't, for example, be mingled with other assets and divided in a divorce.
"A lot of families use them to protect money against creditors or a bad marriage," Stone says.
A trust isn't always for everything in your estate. Leaving an IRA in a trust, Yoshikami says, doesn't give the same tax advantages that leaving it to an individual does. "If you leave an IRA to an individual, they can choose to take the payout over years and earn more over time," he says.
There are many kinds of trusts, and tax implications, to consider. You should have a trust attorney or financial adviser help you decide which is best for you.
•You can open a private foundation.
"There's just something about the sound of 'The Eric L. Green Foundation,' " laughs Eric L. Green, an estate attorney at Convicer & Percy of Glastonbury, Conn.
Green says some families with as little as $500,000 extra — after retirement, college and lifestyle needs are met — set up a foundation to support a charity.
You can pay your child a salary to run the foundation, he says, or pay him to serve on the board. A foundation has to disperse only 5% of its assets each year.
"I've helped people set up foundations to advance poetry reading and to spread medical information in Africa," Green says. It will cost you about $2,500 to $5,000 to set up a small foundation; up to $50,000 for larger ones, he says.
"Wealthy families think it's good for their kids to have to work with a charity," he says. "They think it's better than throwing fancy cars and money at them."
IF YOU EXPECT TO RECEIVE MONEY (Go to: If you want to give money)
Try not to blow it right away.
"Most people act like they've just won the lottery," says Michael Yoshikami, a wealth manager in Walnut Creek, Calif. "They buy a boat or a motorcycle or put an addition onto the house. They just add to their financial obligations."
Not everyone who inherits money, or who gets money regularly from living relatives, is rich. Most are, but not everyone. And not every inheritance is large.
A typical scenario for a typical American who receives an inheritance might go something like this:
An elderly mother dies, her husband having died earlier. She leaves her son and daughter the family home, which has been paid for, and a Roth IRA worth about $100,000. She and her husband bought the house in 1960 for $50,000. Now, it's worth $300,000.
All of a sudden, her two boomer-aged kids have an "estate" worth nearly half a million dollars. What should they do to derive the most benefit from the money and avoid being hit with a big tax bill?
"It can be nerve-racking," says Greg Fernandez, a financial planner at Nations Capital Wealth Management in McLean, Va.
•When you get Mother's house
The best thing about inheriting a house is that you get a "step up" in the value of the house for tax purposes when you sell it.
"The tax basis completely starts on the date of death," Yoshikami says. In our example, if your mother gives you a house she bought for $50,000, you get to "step up" to its current value of $300,000. So if you sell it for $300,000, you wouldn't pay any taxes. It doesn't matter that the home originally was worth $50,000.
Still, selling the family home can be an "emotional moment," Yoshikami says. Some families just can't do it. They let a member of the family move in.
"You need to stand back and make a rational decision," he says. "But if you do make an emotional one, at least understand the financial consequences."
If you let a relative remain in the house, you should have him or her buy your share, Yoshikami says. Get an appraisal and split the value of the house as if it were being sold immediately. Your sibling would pay you for your half.
The best thing in most cases, Fernandez says, is to sell the house and divide the money among siblings. If you wait to sell, and the value of the home falls after your mother's death, just as many home values are dropping now, you would have a loss.
•What to do with a Roth IRA?
Inheriting an IRA can serve you well, as long as you make a couple of decisions by certain deadlines, Fernandez says. The rules are slightly different when inheriting a traditional IRA or a Roth IRA. Our example is for a Roth, from which money distributed is tax-free.
But for that to happen, the Roth IRA must have been in existence for at least five years. If it was a traditional IRA that was converted to a Roth IRA, the conversion must have occurred at least five years ago.
Beneficiaries who aren't the spouse of the deceased can take distributions two ways: over a lifetime or within five years.
The IRS assumes that you'll take distributions over your lifetime, but the first payment must come out of the account before Dec. 31 of the year after your mother's death, Fernandez says. If it doesn't, you'll default to the five-year payout plan.
That may be OK for you. You can choose how much to get in each of the five years — $50,000 one year, zero the next, $20,000 the third, etc. But you'll lose the ability to keep that money in an account that grows tax-deferred over time.
Remember: You can't roll over an inherited Roth IRA into your IRA. It must remain separate.
To take advantage of growth over time, you should choose to withdraw money over your estimated lifetime. (You'll use the IRS' life-expectancy tables to figure that out.) You'll get smaller annual amounts from the Roth IRA each year than if you took the five-year payout, but a much greater amount over your lifetime.
"We call that a stretch IRA, because you're stretching the payments out over your life," Fernandez says.
For a $100,000 Roth IRA that grows in value at 8% a year given out over nearly 20 years, a 43-year-old beneficiary could potentially withdraw more than $795,000 over his lifetime, Fernandez says. (That assumes he dies at 83.)
And he'd still have $61,000 left to give to his heirs.
4 ways women can be better investors
By MarketWatch
For years there's been plenty of talk -- and research -- on the role of women in the business world and as investors. The latest findings still point to a gap between the needs, attitudes and involvement of men and women in investing. Yet, at the same time, women are making more progress than ever as professionals.
So, especially for those who follow principles in my book "The Millionaire Zone," I wanted to share my thoughts on why the gap still exists and what you as an investor can do about it.
According to the research organization Catalyst, women now occupy 50.6% of workplace managerial and professional positions. Yet as investors, women still don't get involved or they invest too conservatively, leaving money on the table.
From extensive research on the topic published by the Oppenheimer Funds, the Allianz banking and insurance group, and others, there are, in a nutshell, four factors:
Education.Women growing up are simply not socialized as investors. According to Oppenheimer, 76% of women wish they had learned more about investing while growing up.
Experience.Most women don't take the investing helm when married.
Fear.According to Allianz, some 90% of women fear "losing it all," and even 48% of those with incomes exceeding $100,000 annually cite that fear.
Adviser disconnect.Most financial advisers are men, and they're still geared to talk to men. According to Sacha Millstone, a founding financial adviser for the Millstone Evans Group at Raymond James, most advisers still talk in jargon. "'Basis points' still don't mean as much as percentages," Millstone says. And there's still a "tendency to tell women what they want to hear, to comfort them, instead of talking about the opportunities in a situation."
It's obvious: Women need to "connect" with investing because we live longer. Through death or divorce, we are more likely to spend more time in control of our financial destiny. About 80% to 90% of women will be solely responsible for their finances someday, according to the National Center for Women and Retirement Research.
And with no defined benefit pension to count on.
And I'll bet you didn't realize this: Allianz found that 96% of men think that financially secure women are sexy.
The good news Current trends and research point to some good news, too.
First, Allianz reported that more women than ever describe themselves as "confident, analytical and disciplined savers." Further, according to Oppenheimer, 46% of women now consider themselves "very or somewhat knowledgeable about investing."
Second, women have always had less ego in their investing approach. As a result they often outperform men, particularly those who have short-term, aggressive investing styles.
Finally, women also are willing to network and use the investment-club approach. About 70% of investment-club members are women.
4 ways to get started I think the following points will help all investors, but especially women who may still be reluctant to wade into investing waters:
Think like a business owner.Business owners understand how businesses work and how to handle the ups and downs. Women are good at this in the business world. According to Millstone: "Women can handle negative news in a business setting, but it brings fear in investing. There's no reason for it."
Buy businesses you understand.If inclined to buy individual stocks, this is a fundamental Warren Buffett value principle. As a woman, you probably understand some businesses better than your male counterparts -- use this to your advantage.
Video on MSN Money
The ABCs of mutual fundsHere's how to sift through the alphabet soup of funds to find one that's right for you.
Get the right advice.Research shows that women prefer the help of advisers. Some 75% of women who rely on advisers are "more comfortable with investing." That said, finding the right one is important -- one tuned in to the needs of women.
Follow role models.In business -- and in investing -- it always helps to find good role models and to study their actions and response to business and market stimuli. Buffett, an investor role model for years, is a good place to start.
Interestingly, a study of the Fortune 500 companies by Catalyst found that companies with more women at the top delivered a higher return -- 34% higher -- than companies with the fewest women. That's another reason women might find a greater connection to investing in the market.
This article was reported and written by Jennifer Openshaw for MarketWatch.com.
For years there's been plenty of talk -- and research -- on the role of women in the business world and as investors. The latest findings still point to a gap between the needs, attitudes and involvement of men and women in investing. Yet, at the same time, women are making more progress than ever as professionals.
So, especially for those who follow principles in my book "The Millionaire Zone," I wanted to share my thoughts on why the gap still exists and what you as an investor can do about it.
According to the research organization Catalyst, women now occupy 50.6% of workplace managerial and professional positions. Yet as investors, women still don't get involved or they invest too conservatively, leaving money on the table.
From extensive research on the topic published by the Oppenheimer Funds, the Allianz banking and insurance group, and others, there are, in a nutshell, four factors:
Education.Women growing up are simply not socialized as investors. According to Oppenheimer, 76% of women wish they had learned more about investing while growing up.
Experience.Most women don't take the investing helm when married.
Fear.According to Allianz, some 90% of women fear "losing it all," and even 48% of those with incomes exceeding $100,000 annually cite that fear.
Adviser disconnect.Most financial advisers are men, and they're still geared to talk to men. According to Sacha Millstone, a founding financial adviser for the Millstone Evans Group at Raymond James, most advisers still talk in jargon. "'Basis points' still don't mean as much as percentages," Millstone says. And there's still a "tendency to tell women what they want to hear, to comfort them, instead of talking about the opportunities in a situation."
It's obvious: Women need to "connect" with investing because we live longer. Through death or divorce, we are more likely to spend more time in control of our financial destiny. About 80% to 90% of women will be solely responsible for their finances someday, according to the National Center for Women and Retirement Research.
And with no defined benefit pension to count on.
And I'll bet you didn't realize this: Allianz found that 96% of men think that financially secure women are sexy.
The good news Current trends and research point to some good news, too.
First, Allianz reported that more women than ever describe themselves as "confident, analytical and disciplined savers." Further, according to Oppenheimer, 46% of women now consider themselves "very or somewhat knowledgeable about investing."
Second, women have always had less ego in their investing approach. As a result they often outperform men, particularly those who have short-term, aggressive investing styles.
Finally, women also are willing to network and use the investment-club approach. About 70% of investment-club members are women.
4 ways to get started I think the following points will help all investors, but especially women who may still be reluctant to wade into investing waters:
Think like a business owner.Business owners understand how businesses work and how to handle the ups and downs. Women are good at this in the business world. According to Millstone: "Women can handle negative news in a business setting, but it brings fear in investing. There's no reason for it."
Buy businesses you understand.If inclined to buy individual stocks, this is a fundamental Warren Buffett value principle. As a woman, you probably understand some businesses better than your male counterparts -- use this to your advantage.
Video on MSN Money
The ABCs of mutual fundsHere's how to sift through the alphabet soup of funds to find one that's right for you.
Get the right advice.Research shows that women prefer the help of advisers. Some 75% of women who rely on advisers are "more comfortable with investing." That said, finding the right one is important -- one tuned in to the needs of women.
Follow role models.In business -- and in investing -- it always helps to find good role models and to study their actions and response to business and market stimuli. Buffett, an investor role model for years, is a good place to start.
Interestingly, a study of the Fortune 500 companies by Catalyst found that companies with more women at the top delivered a higher return -- 34% higher -- than companies with the fewest women. That's another reason women might find a greater connection to investing in the market.
This article was reported and written by Jennifer Openshaw for MarketWatch.com.
10 things your insurance may not cover
By Liz Pulliam Weston
Most people think about their homeowners insurance only a few times in their lives: when they select their insurer, when they're writing premium checks and when they have a claim.
By the time something goes wrong, however, it's usually way too late to begin learning about your policy.
Here are some gaps in your coverage you can't do anything about, of course. Insurers aren't going to cover you for a nuclear accident, for example, no matter how many companies you ask.
Many so-called exclusions, though, vary by the insurer. If you know about them in advance, you may be able to switch carriers or buy extra insurance to stay protected. So pull out your policy and check for the following:
Mold and water damage A spike in mold-related claims at the turn of the century led most insurers to strike the coverage entirely from their homeowners policies.
The frenzy over toxic mold reached a peak around 2002, the year television personality Ed McMahon filed a $20 million lawsuit against his insurer over mold that he said sickened his family and killed his dog. (McMahon later settled for $7.2 million.) A huge increase in mold-related claims in Texas, California, Florida, Nevada and Arizona led insurers to eliminate or at least reduce their exposure.
Most homeowners insurers now exclude mold from their coverage, said Frank J. Coyne, chairman and CEO for the Insurance Services Office, which supplies statistical data to property and casualty insurers. Many insurers also limit how much they'll cover for water damage.
In fact, in some cases you may have trouble getting coverage for a home that's had water claims in the past. Read "When NOT to file a claim" for more details.
Sewer backup The only thing more disgusting than a bathroom floor overflowing with waste is the fact that you may have to pick up the cleaning bill yourself.
Sewage backups are frequently not covered by homeowners policies unless you purchase a special rider. Many homeowners who experience this particular disaster try to get their cities to pay for the damage, but governments typically aren't liable unless the homeowner can prove negligence -- and is willing to go to court over the matter.
A cheaper solution? Check your policy, and if you're not covered, buy the rider for $50 to $100.
War, nuclear accidents and terrorism If your home is burned in a riot or other civil commotion, your insurer probably will pay to rebuild it. If your home is damaged by an invading army or is irradiated by a nearby power plant, however, you're not covered. If your house is destroyed during a terrorist attack, you also may be on your own.
Insurers have long excluded war and nuclear accidents from the list of perils they cover. Until the Sept. 11 attacks, though, most homeowners policies either covered terrorism or were silent on the issue, which usually implies coverage.
Video: Save money on home insurance
Since the World Trade Center attacks, an increasing number of insurers are specifically excluding terrorism coverage from their personal insurance lines, such as homeowners, in addition to banning it from their commercial coverage.
Natural disasters If your home burns in a wildfire, you're probably covered if you live in a developed area. If you live in a remote cabin or your home is rattled apart by an earthquake, inundated by a flood or blown away in a hurricane, you may not be.
The more likely you are to be a victim of a natural disaster, the more reluctant insurers may be to cover you. That's why residents who live near the Gulf Coast or the Atlantic Ocean typically need to supplement their homeowners insurance with hurricane coverage offered by a high-risk pool (and the number of properties considered high-risk has exploded since Hurricane Katrina). California residents, meanwhile, get earthquake coverage from the state-run California Earthquake Authority or from a handful of insurers willing to write earthquake policies.
Many insurers also won't cover fire risks for people who live in forests or far from fire stations. That's true even though some of the biggest wildfire losses have come in developed areas: the Oakland Hills fires of 1991, for example, the Laguna Beach and Malibu fires of 1993, and the San Diego wildfires in 2003. Most of those homeowners had no trouble getting insurance before the fires, while their more remote neighbors often had to buy insurance from high-risk pools.
Continued: Neglect, trampolines and dogs
Floods, meanwhile, aren't covered under homeowners insurance policies -- something many Katrina victims learned to their chagrin. The National Flood Insurance Program, run by the Federal Emergency Management Agency, offers coverage. If you live in an area that's prone to either floods or hurricanes, you need both wind and flood coverage.
If you're the victim of a landslide, however, you're pretty much on your own. That kind of earth movement usually isn't covered, so it pays to get a geologist's report before buying any home near a cliff or on a hill.
Neglect If a tree topples over in a windstorm and crushes your house, you're covered. If your home collapses because of a termite infestation, you're probably not.
Insurers expect you to take care of your home and deal with any maintenance issues on your own dime. Insurance generally covers sudden and unexpected losses, not losses from termites, rodent infestations or a water leak you never quite got around to fixing. You're expected to detect the problem and prevent the situation from getting out of control. If you don't, any damage done typically won't be covered by your insurer.
Bruce Johnson, author of "50 Simple Ways to Save Your House," recommends you conduct regular inspections to detect such problems. At least twice a year, tour the exterior of your home looking for cracks, decay or water damage. Check the condition of the roof and inspect the basement or crawl space for other hidden problems, including rodent droppings, termites or leaks.
If you find a problem, fix it. Remember that home maintenance problems usually just get more expensive.
Trampolines Insurers charge more for certain hazards, like pools and spas. Trampolines, though, are often excluded outright.
They're a whole lot of fun, but they also offer a whole lot of ways to seriously hurt yourself. That's why your homeowners policy probably excludes trampolines from coverage and why your current insurer may threaten to drop you if you buy one. They simply don't want to pay for the lawsuit and medical bills if the neighbor kid breaks his neck.
If you insist on having one, you may need to shop around for an insurer that will tolerate, if not cover, trampolines. But you might want to think seriously about a less hazardous form of at-home fun.
Dogs If you own a toothless Chihuahua, your insurer probably doesn't care. Buy a pit bull, Rottweiler or wolf hybrid, however, and you may find your insurance gets more expensive -- if you can persuade your insurer to cover you at all.
Dog bites cost insurers about $310 million a year, and an increasing number of companies have a blacklist of breeds they won't accept or charge more to cover. Pit bulls, which lead the Centers for Disease Control and Prevention's list (.pdf download) of deadly breeds, are particularly unwelcome. Other troublesome breeds include German shepherds, Rottweilers, wolf hybrids, huskies, malamutes and Dobermans.
Video: Save money on home insurance
If your dog has ever bitten anyone, regardless of its breed, you're probably going to have trouble getting coverage as well -- particularly if it was an unprovoked attack.
Each insurer has different policies, though, so you may be able to find affordable coverage if you shop around. You also can ask the insurer to exclude your dog, meaning that you'll pay for any damage it does. You also should invest in some training, since a biting dog is a hazard to everyone around you.
Continued: Intentional damage, computers and luxury goods
Intentional damage If your ex sets fire to your home, you're probably covered. If the fire is started by your rebellious teenager or an estranged spouse, however, you may not be.
Intentional damage by an insured person -- or by the person's spouse, children or relatives living in the house -- typically isn't covered. Estranged spouses often come into a gray area. Although they may not live in the home, they may be listed on the policy or the property deed and be considered to have an insurable interest in the home. Companies have, in fact, made this argument to deny or limit coverage to homeowners whose property was damaged by an estranged spouse. (See "Your teen's troubles can cost you a bundle.")
Victims advocates complain these policies are unfair, since there's often no way to prevent such damage. If you're worried about the risk, however, it may motivate you to get help for a destructive teen, beef up your home's security system or reach a quicker divorce settlement.
Computer equipment If you have a personal computer or two, your homeowners insurance may pay you enough to buy a new one -- or it may not. If you're running a home business, however, your homeowners insurance almost certainly will fall short.
Here's another area where it pays to read your policy. Some insurers will give you a check only for what your computer equipment is worth now, which is probably a fraction of what you paid for it. Even those that do pay for replacements typically have a cap, often about $2,500. Many require you to have supplemental coverage if you want a bigger check than that, or if you run a business from your home.
Read your policy, note the limits and talk to your insurer about supplemental coverage if you need more.
Also, know that most policies won't cover the value of digital information stored on your computer, including your music and photo collections. That's all the more reason to invest in a good, off-site backup system and to use it frequently.
Luxury items and collectibles If you don't own anything special, the entire contents of your home are probably covered under your homeowners policy. If you have antiques, guns, jewelry, collectibles or fine furs, you may need extra coverage.
Video: Save money on home insurance
The typical policy limits coverage for luxury items and collectibles. You might get as little as $200 for the coin collection you were hoping would fund Junior's college, or $1,000 to cover all your jewelry, watches and furs.Once again: Check your policy, and buy supplemental insurance if you want more coverage. To make sure you have enough coverage for all your stuff, use the home inventory software available at the Insurance Information Institute.
Columns by Liz Pulliam Weston, the Web's most-read personal finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.
Published Sept. 24, 2007
Most people think about their homeowners insurance only a few times in their lives: when they select their insurer, when they're writing premium checks and when they have a claim.
By the time something goes wrong, however, it's usually way too late to begin learning about your policy.
Here are some gaps in your coverage you can't do anything about, of course. Insurers aren't going to cover you for a nuclear accident, for example, no matter how many companies you ask.
Many so-called exclusions, though, vary by the insurer. If you know about them in advance, you may be able to switch carriers or buy extra insurance to stay protected. So pull out your policy and check for the following:
Mold and water damage A spike in mold-related claims at the turn of the century led most insurers to strike the coverage entirely from their homeowners policies.
The frenzy over toxic mold reached a peak around 2002, the year television personality Ed McMahon filed a $20 million lawsuit against his insurer over mold that he said sickened his family and killed his dog. (McMahon later settled for $7.2 million.) A huge increase in mold-related claims in Texas, California, Florida, Nevada and Arizona led insurers to eliminate or at least reduce their exposure.
Most homeowners insurers now exclude mold from their coverage, said Frank J. Coyne, chairman and CEO for the Insurance Services Office, which supplies statistical data to property and casualty insurers. Many insurers also limit how much they'll cover for water damage.
In fact, in some cases you may have trouble getting coverage for a home that's had water claims in the past. Read "When NOT to file a claim" for more details.
Sewer backup The only thing more disgusting than a bathroom floor overflowing with waste is the fact that you may have to pick up the cleaning bill yourself.
Sewage backups are frequently not covered by homeowners policies unless you purchase a special rider. Many homeowners who experience this particular disaster try to get their cities to pay for the damage, but governments typically aren't liable unless the homeowner can prove negligence -- and is willing to go to court over the matter.
A cheaper solution? Check your policy, and if you're not covered, buy the rider for $50 to $100.
War, nuclear accidents and terrorism If your home is burned in a riot or other civil commotion, your insurer probably will pay to rebuild it. If your home is damaged by an invading army or is irradiated by a nearby power plant, however, you're not covered. If your house is destroyed during a terrorist attack, you also may be on your own.
Insurers have long excluded war and nuclear accidents from the list of perils they cover. Until the Sept. 11 attacks, though, most homeowners policies either covered terrorism or were silent on the issue, which usually implies coverage.
Video: Save money on home insurance
Since the World Trade Center attacks, an increasing number of insurers are specifically excluding terrorism coverage from their personal insurance lines, such as homeowners, in addition to banning it from their commercial coverage.
Natural disasters If your home burns in a wildfire, you're probably covered if you live in a developed area. If you live in a remote cabin or your home is rattled apart by an earthquake, inundated by a flood or blown away in a hurricane, you may not be.
The more likely you are to be a victim of a natural disaster, the more reluctant insurers may be to cover you. That's why residents who live near the Gulf Coast or the Atlantic Ocean typically need to supplement their homeowners insurance with hurricane coverage offered by a high-risk pool (and the number of properties considered high-risk has exploded since Hurricane Katrina). California residents, meanwhile, get earthquake coverage from the state-run California Earthquake Authority or from a handful of insurers willing to write earthquake policies.
Many insurers also won't cover fire risks for people who live in forests or far from fire stations. That's true even though some of the biggest wildfire losses have come in developed areas: the Oakland Hills fires of 1991, for example, the Laguna Beach and Malibu fires of 1993, and the San Diego wildfires in 2003. Most of those homeowners had no trouble getting insurance before the fires, while their more remote neighbors often had to buy insurance from high-risk pools.
Continued: Neglect, trampolines and dogs
Floods, meanwhile, aren't covered under homeowners insurance policies -- something many Katrina victims learned to their chagrin. The National Flood Insurance Program, run by the Federal Emergency Management Agency, offers coverage. If you live in an area that's prone to either floods or hurricanes, you need both wind and flood coverage.
If you're the victim of a landslide, however, you're pretty much on your own. That kind of earth movement usually isn't covered, so it pays to get a geologist's report before buying any home near a cliff or on a hill.
Neglect If a tree topples over in a windstorm and crushes your house, you're covered. If your home collapses because of a termite infestation, you're probably not.
Insurers expect you to take care of your home and deal with any maintenance issues on your own dime. Insurance generally covers sudden and unexpected losses, not losses from termites, rodent infestations or a water leak you never quite got around to fixing. You're expected to detect the problem and prevent the situation from getting out of control. If you don't, any damage done typically won't be covered by your insurer.
Bruce Johnson, author of "50 Simple Ways to Save Your House," recommends you conduct regular inspections to detect such problems. At least twice a year, tour the exterior of your home looking for cracks, decay or water damage. Check the condition of the roof and inspect the basement or crawl space for other hidden problems, including rodent droppings, termites or leaks.
If you find a problem, fix it. Remember that home maintenance problems usually just get more expensive.
Trampolines Insurers charge more for certain hazards, like pools and spas. Trampolines, though, are often excluded outright.
They're a whole lot of fun, but they also offer a whole lot of ways to seriously hurt yourself. That's why your homeowners policy probably excludes trampolines from coverage and why your current insurer may threaten to drop you if you buy one. They simply don't want to pay for the lawsuit and medical bills if the neighbor kid breaks his neck.
If you insist on having one, you may need to shop around for an insurer that will tolerate, if not cover, trampolines. But you might want to think seriously about a less hazardous form of at-home fun.
Dogs If you own a toothless Chihuahua, your insurer probably doesn't care. Buy a pit bull, Rottweiler or wolf hybrid, however, and you may find your insurance gets more expensive -- if you can persuade your insurer to cover you at all.
Dog bites cost insurers about $310 million a year, and an increasing number of companies have a blacklist of breeds they won't accept or charge more to cover. Pit bulls, which lead the Centers for Disease Control and Prevention's list (.pdf download) of deadly breeds, are particularly unwelcome. Other troublesome breeds include German shepherds, Rottweilers, wolf hybrids, huskies, malamutes and Dobermans.
Video: Save money on home insurance
If your dog has ever bitten anyone, regardless of its breed, you're probably going to have trouble getting coverage as well -- particularly if it was an unprovoked attack.
Each insurer has different policies, though, so you may be able to find affordable coverage if you shop around. You also can ask the insurer to exclude your dog, meaning that you'll pay for any damage it does. You also should invest in some training, since a biting dog is a hazard to everyone around you.
Continued: Intentional damage, computers and luxury goods
Intentional damage If your ex sets fire to your home, you're probably covered. If the fire is started by your rebellious teenager or an estranged spouse, however, you may not be.
Intentional damage by an insured person -- or by the person's spouse, children or relatives living in the house -- typically isn't covered. Estranged spouses often come into a gray area. Although they may not live in the home, they may be listed on the policy or the property deed and be considered to have an insurable interest in the home. Companies have, in fact, made this argument to deny or limit coverage to homeowners whose property was damaged by an estranged spouse. (See "Your teen's troubles can cost you a bundle.")
Victims advocates complain these policies are unfair, since there's often no way to prevent such damage. If you're worried about the risk, however, it may motivate you to get help for a destructive teen, beef up your home's security system or reach a quicker divorce settlement.
Computer equipment If you have a personal computer or two, your homeowners insurance may pay you enough to buy a new one -- or it may not. If you're running a home business, however, your homeowners insurance almost certainly will fall short.
Here's another area where it pays to read your policy. Some insurers will give you a check only for what your computer equipment is worth now, which is probably a fraction of what you paid for it. Even those that do pay for replacements typically have a cap, often about $2,500. Many require you to have supplemental coverage if you want a bigger check than that, or if you run a business from your home.
Read your policy, note the limits and talk to your insurer about supplemental coverage if you need more.
Also, know that most policies won't cover the value of digital information stored on your computer, including your music and photo collections. That's all the more reason to invest in a good, off-site backup system and to use it frequently.
Luxury items and collectibles If you don't own anything special, the entire contents of your home are probably covered under your homeowners policy. If you have antiques, guns, jewelry, collectibles or fine furs, you may need extra coverage.
Video: Save money on home insurance
The typical policy limits coverage for luxury items and collectibles. You might get as little as $200 for the coin collection you were hoping would fund Junior's college, or $1,000 to cover all your jewelry, watches and furs.Once again: Check your policy, and buy supplemental insurance if you want more coverage. To make sure you have enough coverage for all your stuff, use the home inventory software available at the Insurance Information Institute.
Columns by Liz Pulliam Weston, the Web's most-read personal finance writer and winner of the 2007 Clarion Award for online journalism, appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board.
Published Sept. 24, 2007
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