FREEMAN-SPICER FINANCIAL SERVICES
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316 South Eddy Street South Bend, IN 46617
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Vol. 24, No. 3 • March, 2006
You can find this newsletter and some past newsletters on the web @ Freeman-Spicer.com
Good For The Broker, But Not For You
Unlike, say, salespeople in a clothing store, brokers are obligated to see that what they sell fits you - your financial condition and sophistication, investment objective and tolerance for risk. But complaints of unsuitable investments are among the most common to reach the NASD, the securities industry’s self-regulator. And it goes beyond brokers stuffing your 90-year-old Uncle Jack’s portfolio with penny stocks. Last year the NASD fined brokers $40 million for steering their customers into certain share classes of mutual funds, maximizing the brokers’ take at their clients’ expense.
Class Acts: Among mutual funds charging sales loads, different classes of shares - identified by the letters A, B and C - carry different sales charges and expense ratios. A’s are usually the best deal for a long-term investor, says business prof Thomas Smythe of Furman University. (Use this table and the NASD’s fund expense analyzer [www.nasd.com/fundanalyzer] to check what your broker is telling and selling you.
Type / Typical Cost |
When It’s Right For You |
When It’s A Bad Choice |
Class A - 5% up-front sales load and 1.3% annual operating fees, known as “expense ratios,” for U.S. stock funds. |
Long-term investors save on operating fees. “Breakpoints” cut loads on big purchases. |
If you move in and out of funds, the up-front sales commission will put a hurt on your returns. |
Class B - No up-front load; 2% expense ration; back-end charge when you sell that starts at 5% and declines to 0% over time. Usually convert to cheaper A shares after eight years. |
Like A’s, B shares are for long-term holders. Though they seem cheaper - that’s why brokers like them - they may cost the same or more overtime. |
A’s are better if you earn breakpoints for big investments. And if B’s don’t convert to cheaper A’s, your returns will suffer. |
Class C - No up-front sales load; 2% expense ration; back-end charge of 1% declining to 0% after a year. |
If you plan to sell within seven years, C’s typically beat A’s and B’s. |
The expense ratio will kill you over the long run. (Money Magazine 3/06) |
Tired of that same ole game . . . . . . . . . . look at www.jigzone.com. Put together jigsaw puzzles right on your computer screen. Easy to hard ones can be done quickly with your mouse.
Why are men’s underwear also known as BVD’s .................. BVD is a registered trademark of a company that manufactures men’s underwear. The three men who formed the company in 1876 were named Bradley, Voorhies, and Day. Lacking the imagination for a more creative name, they chose their initials - BVD. (The Book of Totally Useless Information)
Be A Google Expert
Google has long excelled at tracking down Web links on obscure topics, from Asian floral designs to Zambian hairstyles. But now its improved search box also provides quick, direct answers to many common queries. Here are some tips and tricks:
• Why hasn’t my package arrived? To find out, type in a tracking number for any major shipping service.
• Is my father’s flight on time? Enter the name of an airline followed by a flight number to check on a plane’s status.
• Is it going to snow? Type in “weather” and any city and state for a quick (illustrated) report.
• How good is Brokeback Mountain? Type “movie: Brokeback Mountain” (or any other film name) for an instant compilation of published reviews.
• What’s $500 worth in euros? A new currency-converter feature replies to input like “$500 USD in euros.”
In many offices, Google has made age-old search tools seem obsolete:
• The Phone Book - enter the name and address of a person or business into Google’s search box for a phone listing.
• The Calculator - Type in any math problem to get a quick response.
• The Dictionary - Learn what a word means by typing in, for example, “define: bamboozle.”
• Map - Get maps and driving directions by punching in any street address.
• Shopping Catalogs - At Froogle.com, compare prices at nearby stores with the new local shopping tool. It now even works on mobile phones.
Want to improve your searches? Expert info hunters suggest:
• Search for answers, not questions. Type in “The distance between Boston and Los Angeles is” not “How far is Boston from L.A.?” Google looks for pages that include the exact phrase you typed in; sites detailing a fact may not include a question phrase. To address that issue, Google is starting to enable it’s box to understand questions posed in common parlance.
• Use quotation marks. To veterans this may seem obvious, but it’s the simplest way to trim millions of search results down to a manageable list.
• Download the Google Toolbar. Rather than visit Google’s website every time you want to run a search, install the free toolbar to search more efficiently. Bonus feature: the toolbar blocks those annoying pop-up ads. (Time Magazine)
Coach John Wooden’s 10 Rules to Live By:
1. 1 Corinthians 13. (This Bible chapter addresses the importance of charity - love - and ends with the verse, “And now abideth faith, hope, charity, these there; but the greatest of these is charity.”)
2. Make each day your masterpiece.
3. Drink deeply from good books.
4. Freedom from desire leads to inner peace. (Lao-tzu)
5. Failure to prepare is preparing to fail. I will get ready and then, perhaps, my chance will come.
6. Ability may get you to the tip, but it takes character to keep you there. (Abraham Lincoln)
7. Help others.
8. It is better to trust and be disappointed occasionally than to distrust and be miserable all the time.
9. Almost anyone can stand adversity, but to test a person’s character, give them power. (Abraham Lincoln)
10. Be more interested in your character, which is what you really are, than in your reputation, which is what others perceive you to be.
Food For Thought
Generations have common tendencies:
1. The Greatest Generation - World War II to 1946
• Team oriented
• Strong work ethic
• Strong savers
• Second income started
• Higher loyalty to their employer
• Stayed the course
2. Baby Boomers - 1946 to 1964
• Team oriented but more individualism
• Strong work ethic
• Mediocre savers
• Second income needed
• High borrowers
• More freedom
• Changed the system
• Want the best
3. Generation X - 1965 to 1978
• All about me
• Little loyalty - job
• Don’t join anything
• Do not save
• Want to make a lot of money now
• “Do this and you will get that”
• Multiple career changes
4. Generation Y - 1979 to 2000
• They are spenders
• Trend setters
• Large impact on household purchasing patterns
• Greater financial security
• Very tech savvy
• Confident
• Less individualism, more team concept
• Culturally diverse
This generation is similar to the generation in the early 1800's, which started the Industrial Revolution. (Kyle)
Personnel .................... When we ask supervisors and managers how they keep good people, many immediately respond, “Money.” Research suggests 89% of managers truly believe ti’s largely about the money. In effect, they blame organizational policies or pay scales for the loss of talent. Well, the truth is, if you’re a supervisor at any level, you actually have more power than anyone else to keep your employees. Why? Because the factors that satisfy employees are largely Sincerely,
within your control and haven’t changed much in 25 years: a good work
environment, meaningful work, fair pay, a chance to grow, recognition
and respect. (Love ‘Em or Lose ‘Em) Edward C. Levy
President