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Investing, Insurance, Stocks, College Loans, Phones
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Most investors quizzed on how to survive turbulent financial markets flubbed a question about which organization insures them against losing money in the stock market. Only 16 percent got the answer right: No organization does. Most said investors were insured by the US Securities and Exchange Commission (33 percent), the Federal Deposit Insurance Corp. (16 percent), or the Securities Investor Protection Corp. (16 percent), according to a survey by the SIPC and the National Association of Investors Corp. Investors with higher incomes and more education didn't do much better on the quiz than others.
Overall, only 15 percent got a passing grade. Two out of three didn't know that if they had a dispute with a broker, they should put their complaints in writing and keep a copy. More than four out of five didn't understand how margin accounts work or how to use limit orders, which set a price at which a stock should be sold. Most aced a question on bankruptcy proceedings, however; nearly 60 percent knew what Chapter 11 protection meant.
A change in the Federal Communications Commission's rules will require that long-distance phone companies notify customersrather than the FCCabout rate increases before they show up on bills. This move doesn't mean you're losing any federal protection, because even the FCC admits it has "applied minimal regulation" to long-distance rates.
Now customers will get a written statement of the agreement governing long-distance service, much like the statements received with credit cards, making it easier to compare calling plans. The phone companies are sending out notices about the rule changes, and how they plan to notify customers about rate increases.
If you're shopping for life insurance, be wary of the Web. Sites offering comparative term life insurance information vary widely in quality and reliability, according to a survey by the Consumer Federation of America.
Three-quarters of Web sites with quotes on term insurance did not show the lowest-cost coverage available, says the CFA. The six that identified the low-cost insurer properly were InsWeb, NetQuote, Quicken .com, Quotesmith.com, Term4Sale and YouDecide .com. CFA labeled the following sites so inadequate and potentially misleading that consumers should stay away from them: InsureRate, Intelliquote.com, InsureOne, CompuSurance.com, speed-insure, 4freequotes.com, AccuQuote, AnswerFinancial, and ebix.com.
If you had followed all the stock picks made by the major brokerage houses over the last few years, you'd have made money with only four out of 19 of the brokers, according to a new ranking system developed by an online subscription-based investment service. Investars.com set up a hypothetical trading system to test the performance of investment firms that issued ratings on at least 500 stocks. Tracking its picks from January 1997 through May 2001, it "invested" $300,000 in each stock rated a "buy," upped the fictional investment to $450,000 for a "strong buy," and shelled out only $200,000 for "outperform" ratings. It dumped $300,000 worth of stocks on a "sell," and up to $450,000 on a "strong sell." The top firm was Credit Suisse First Boston, whose simulated portfolio gained 7.6 percent, followed by A.G. Edwards (6.0 percent), Salomon Smith Barney (3.5 percent), and Merrill Lynch (1.1 percent).
Investors' hypothetical portfolios also did well with eight out of 34 boutique brokerages that covered between 100 and 500 stocks: Gruntal (20.9 percent), Schroders (13.2 percent), Sutro (8.9 percent), Brown Brothers Harriman (7.8 percent), BB&T Capital Markets (6.1 percent), Advest (4.1 percent), Southwest Securities (2.2 percent), and Friedman, Billings, Ramsey & Co. (1.1 percent).
Interest rates on federal student loans have dropped by up to 2.2 percentage points for the 2001-02 school yearthe lowest level in decadesthanks to the Federal Reserve's cut in short-term interest rates. A borrower repaying a $10,000 loan will see the monthly payment drop from $122 to $112. The decrease affects borrowers who are still in school, under deferment or grace period, or already repaying loans. Lenders will automatically adjust for the new rates, which will remain in effect through June 2002.
|Stafford loan (in-school grace period or deferment)||7.59%||5.39%|
|Stafford loan (repayment)||8.19||5.99|
Yvonne Wollenberg. Financial Beat. Medical Economics 2001;18:14.