Mutual funds, Banking, Stocks, Auto safety
Here's something new to look for in a mutual fund prospectus: Beginning in April, it will have to tell you how much the fund likely will add to your tax bill. Under rules adopted by the Securities and Exchange Commission, funds will have to project what portion of returns will go to taxes so investors can anticipate how much of their gains Uncle Sam would get.
The figures will be presented in a standardized table that shows the tax impact of the fund's stock trades. It also must show investors a worst-case scenario for the tax consequences of their sale and purchase of fund shares at the highest tax rate.
Despite the attention paid recently to the rising fees charged by mutual funds, taxes take a bigger bite out of investors' wallets. Taxes on the funds' stock trades eat up more than 2.5 percent of the average total return, with the annual impact ranging from zero for the most tax-efficient funds to 5.6 percent. By contrast, fees averaged 1.4 percent in 1999, according to the SEC.
The "bite" is even larger, of course, if the investor sells his fund shares at a profit.
Rising bank fees and falling interest rates are reducing the benefits of interest-bearing checking accounts, according to Bankrate.com, an online service that surveys the banking industry. Average monthly service fees on interest accounts climbed nearly 9 percent in the last two years, to $10.43, while the average yield has fallen to 1.17 percent from 1.33 percent since 1998. Bankrate.com's data comes from 353 banks and thrift institutions.
The average minimum balance to avoid fees still exceeds $2,200. If you keep $2,000 in a checking account, you can earn $23 in interest per year, but pay $125 in fees. If your balance routinely falls below the minimum, consider a non-interest-bearing account. Their average monthly fee is $6.18, and the average minimum balance is $416.57.
Bank fees for other services are also rising. The charge for a bounced check now averages $24, up about 10 percent in two years, and ATM fees are also going up. Almost 90 percent of the banks surveyed charge non-account holders a fee for each ATM transaction; the average is $1.43.
The survey did find one bright spot for consumers: More than 80 percent of banks allow free debit card purchases, up from 73 percent two years ago.
Online brokers generally charge lower fees for stock trades than traditional discount brokers do, according to an annual survey by the American Association of Individual Investors. The average minimum fee charged by online brokers for any stock trade is $13.76. The lowest minimum is $0, offered by The Financial Cafe.com, (www.financialcafe.com ), among others, and the highest is $29.95, charged by WallStreet Electronica Online Trading ( www.wallstreete.com).
Traditional discount brokers charge an average minimum fee of $35.48. The lowest minimum charged by a discount firm is $9 at Perelman-Carley & Associates (they have no Web site); the highest is $50, charged by the Bank of San Francisco.
Trading 100 shares of stock priced at $50 a share would cost you an average of $41 at a discount broker, ranging from a low of $9 at Perelman-Carley to a high of $65 at Shochet Securities. The same trade would cost you an average of $14 with an online broker, from a low of $0 at The Financial Cafe.com to a high of $31.95 at WallStreet Electronica.
The survey defined online brokers as those trading primarily on the Web. Brick-and-mortar brokers were classified as traditional even if they also place trades online.
If you're in a two-wheel-drive Chevy Blazer or GMC Jimmy, there's a greater than 40 percent chance that you'll flip over in a one-car crash, according to new government ratings. The one- to five-star ratings are based on how top-heavy the vehicle is, not on performance. But they confirm that top-heavy sport-utility vehicles have a much higher risk of rolling over than passenger cars.
Some are worse than others. The two-wheel-drive models of the Blazer and the Jimmy earned only one star, which means they have more than a 40 percent chance of a rollover. The Ford Explorer, which has spawned lawsuits over crashes linked to the troubled Firestone tires, received two stars. The highest ranking for any SUV tested was only three stars, which means a 20 to 30 percent chance of a rollover. In contrast, the Honda Accord sedan received five stars (less than a 10 percent chance of rolling over).
The ratings were assessed by the National Highway Traffic Safety Administration, which examined about 79 models of 2001 cars and trucks.
More than 10,000 people die each year in rollover crashes, but the vehicles aren't always at fault. "Eighty percent of the people killed in single-vehicle rollovers were unbelted," reports NHSTA Administrator Sue Bailey.
Yvonne Wollenberg. Financial Beat.