Money markets come with good track record

Dear G.C.: First, we have to define “money market.” Banks have grabbed the term “money market,” and this is just a name for one of their accounts. Money-market mutual funds, on the other hand, are mutual funds where you invest at a dollar a share, which remains constant but the number of shares can go up and down. These funds invest in very short-term commercial paper and similar investments where the return can be higher. You probably have your money in a bank someplace with a very low certificate of deposit interest rate. In that environment, however, you are guaranteed by the Federal Deposit Insurance Corp. that your principal at least will remain constant. There is no such guarantee in a true money market fund, but they do have very good track records. In general, money markets are “parking” areas not designed or appropriate for longer-term investments.

‘Seminar’ actually sales pitch

Dear Bruce: I attended an investment seminar for retirees, and the person told us to come to her office to open an index brokerage account for seniors. It seems this program guarantees investors profit but no loss, regardless of stocks going up or down. She says this guy put in $50,000 and took out $150,000 even after the market crashed, which had his investment down to $40,000. I am curious as to its existence and mechanics and if it really exists. Can you advise me on this? – G.R., via e-mail

Dear G.R.: First of all, let me characterize what you attended. It was not an “investment seminar.” It was a pitch – a sales presentation. There is a major difference between seminars and pitches. From the scant information you gave to me, where you say $50,000 went to $150,000 even though his investment was down to $40,000, I would have to be very skeptical. I don’t know the mechanics of this particular pitch, but when people start throwing those kind of numbers around, unless they can be absolutely verified, which I doubt, I would in no way invest a dime. It may be that this is the best thing since the invention of ice cream, but as soon as those kind of numbers are used as examples, my skepticism meter goes tilt.

Financial plan needs restructuring

Dear Bruce: We are an early-40s, child-free couple. Our only debt is our primary mortgage and mortgages on two rental properties, all at low interest rates – no credit cards and no car payments. Over the years, we have been gifted a total of $90,000 in two blue-chip stocks, which we are letting sit, merely taking the quarterly dividend payments and placing that into a simple savings account. I’m self-employed, and my husband’s employer provides stock options and 401(k), which we are contributing a small percentage to each month. The 401(k) has a balance of about $19,000. Beyond that, our ability to save for retirement has been limited, as we have been focusing our funds on growing my successful home business. We are concerned about being able to retire and feel that while we’re in pretty good shape today, we will probably have to keep working indefinitely. What would you recommend for retirement planning for us? – G.P., Oregon

Dear G.P.: On the plus side, you have not gone into hock, and you have made some decent real-estate investments. On the downside, you’re in your early 40s and have a scant $19,000 in your 401(k) and you’re very likely making a contribution only equal to what the employer matches. That’s the bad news. You haven’t indicated what you’re doing at home and how those investments are paying off. There’s no question you may feel pretty good today, but you’re not saving anything and that doesn’t leave you in the best of shape. Leaving the $90,000 without checking from time to time to see whether those blue chips are the ones you should keep is a mistake. And, finally, putting the dividends into a simple savings account is throwing money away. You should sit down and restructure your entire financial plan. It does need at the very least some fine-tuning and, in my opinion, something a bit more dramatic.

Name on deed ensures ownership

Dear Bruce: My name is on the deed but not on the mortgage of our home. What are my rights? What would happen if my husband and I were to separate or divorce? Only my husband’s name is on both. Wouldn’t it be better if my name were on both, also? We bought this house together. – Reader in Vermont

Dear Reader: I’m not quite sure how this happened, but it works to your advantage. The thing you want to be on is the deed. That means the house is half yours. If you divorce, very likely that’s the way it will come down, although states are not uniform in this regard. There are states with equal distribution, self-explanatory and equitable distribution that can mean one side gets more than the other. The fact is, if the house gets split up and it’s still mortgaged, he’s on the hook and you are not. Don’t mess with this situation.

Bruce Williams is a national radio talk show host and syndicated columnist. He can be reached at bruce@brucewilliams.com.