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Mutual Funds, Travel, Taxes, Kids, Fraud, Phones Autos, IRS, Off-Road Safety
|Jump to:||Choose article section...Mutual Funds: Having too many funds can give you added expenses and grief . . . . . . and the wrong ones will run up your tax bill Travel: Don't like e-tickets? Get out your wallet Taxes: Drive green and get green back Kids: How to bug your child Fraud: Is that an air bag in your caror just some old towels? Phones: After an hour of talking, throw this one in the trash IRS: New service makes it easier to argue with the taxman Autos: How much will that new car be worth down the road? Off-Road Safety: Do you want your youngster driving one of these? Fraud: Sound too good to be true? Guess what|
Limit your portfolio to no more than 10 actively managed funds to get the right balance between diversification and overkill, says a study by Charles Schwab's Center for Investment Research. The financial firm studied the returns of computer-simulated portfolios with from one to 10 funds per asset class over three years to find the optimal number.
Investors do best with up to three funds in each of three asset typessmall-cap, large-cap, and internationaland one diversified bond fund. If you invest in index funds, you can get away with just one broad-based diversified fund for each type.
A crowded portfolio increases your exposure to more taxes, fee expenses, and paperwork. Holding too few funds, on the other hand, means you could lose a substantial chunk of your investments if one of them starts to tank.
Investors in the top tax bracket are giving up nearly a quarter of their gross returns to Uncle Sam, says a study by Lipper, a fund research firm. Net annual returns for diversified equity funds, after deducting expenses and sales loads, averaged 8.6 percent over the past five years. But for married taxpayers earning more than $307,050 and paying the highest income tax rate of 38.6 percent, taxes shrank the average return to 6.3 percent.
You can hold on to more of your investment dollar by choosing tax-efficient funds. When considering a fund, read the prospectus carefully. Under rules imposed last year by the Securities and Exchange Commission, mutual funds must publish after-tax returns in the prospectus, calculated at the highest federal income tax bracket for a worst-case scenario.
Expect to pay up to $25 extra if you want a paper airline ticket. Most major US airlines plan to eliminate the traditional paper ticket within two years. In the meantime, the carriers are adding a surcharge, or increasing an existing surcharge, for passengers who can't make do with an e-ticket. Northwest Airlines bumped its surcharge from $10 to $25 (except for business fares), and United Airlines, American Airlines, and Continental Airlines charge $20 for each paper ticket.
Most airlines have arrangements with several other carriers to honor one another's e-tickets. You'll need a paper ticket only if your flight is canceled and the next best flight is on an airline that doesn't have such an agreement with your original carrier.
If you purchase a Toyota Prius, Uncle Sam will give you a $2,000 clean-burning fuel income tax deduction. Owners of 2001, 2002, and 2003 models can claim the one-time deduction for the year they started driving the car. Ask your Toyota dealer for copies of letters between the IRS and the carmaker concerning the tax deduction and keep them with a proof of purchase.
The Prius, a hybrid electric-gasoline vehicle, is the first such auto to qualify, but Honda has applied for this certification for its Insight and the Civic Hybrid. Hybrid vehicles combine a small gasoline engine and an electric motor that operate either alternately or together to reduce emissions and increase fuel economy. The cars don't have to be plugged in because the batteries recharge automatically when the gas engine is running.
A new tracking device can alert you if your youngster wandersor is lured awayfrom a designated safe zone. The KNR1 Kidnap Alert/Recovery System has a small radio transmitter that you strap to your child's wrist, ankle, or waist. The 3-ounce transmitter will send an alarm to a monitoring console if the child leaves the safe zone, and then will send a tracking signal to let you know where she went, within a 1-mile range. The system costs from $1,475 and is available from QuarkSpy, a surveillance system company. For more information, call 800-343-6443.
If you need to replace the air bag in your car, beware a scam that installs phony units. Some crooked repair shops are stuffing rags, towels, cans, paper, and other useless materials into replacement bags, says the Automotive Occupant Restraints Council, an industry organization. Consumers can also get stuck with a remanufactured air bag patched together from different brands that won't protect passengers in a collision.
To make sure your air bag is viable, ask a certified technician to inspect replacement air bags and those in any used car you buy. To find a certified technician, call Supplemental Restraint Specialists at 800-238-1777 or Airbag Service International at 800-2-AIRBAG.
Disposable cell phones should soon be stacked on convenience store shelves. This fall, Hop-On, a California company, plans to market throwaway phones that can make or receive calls. For $40, buyers will get a small keypad, a hands-free microphone and earpiece, and 60 minutes of calling time, with no roaming or long-distance charges. The phone can then be loaded with additional minutes, discarded, or returned to Hop-On for a $5 rebate certificate.
Small-business and self-employed taxpayers can use fast-track mediation for disputes with the Internal Revenue Service. The new process can resolve tax disputes within 40 days, compared to the regular appeals process that can take several months. An IRS mediator will help the taxpayer and the agency reach a mutually agreeable resolution. If the dispute can't be resolved through mediation, it will go through the normal appeals process. Taxpayers can withdraw from mediation at any time.
For more information, visit the IRS Web site at www.irs.gov, and click on "Businesses." On the businesses page, select "Small Business/Self-Employed," then click on "Fast Track Mediation."
Volkswagen models hold on to more of their original value after three years than any other brand, says the Automotive Lease Guide, which ranks the resale values of foreign and domestic cars. Honda, Toyota, Subaru, Nissan, Jeep, and GMC vehicles also exceeded industry averages for resale values. Mercedes-Benz was the top-ranking luxury car brand, followed by BMW, Acura, Lexus, and Audi.
|Vehicle type||Best model|
|Compact car||MINI Cooper|
|Midsize car||Volkswagen Passat|
|Sports car||Porsche 911|
|Near-luxury car||BMW 3 Series|
|Luxury car||Mercedes-Benz CLK-Class|
|Sub-compact SUV||Honda CR-V|
|Compact SUV||Acura MDX|
|Full-size SUV||Toyota Sequoia|
|Compact truck||Toyota Tacoma|
|Full-size truck||Toyota Tundra|
Accidents involving four-wheel all-terrain vehicles have killed more than 4,500 people since 1982, including 1,700 children under 16, says a new report from the Consumer Federation of America. The number of injuries caused by the vehicles more than doubled between 1993 and 2001.
Many states do not have traffic laws that cover ATVs; in 24 states, there's no minimum age for ATV drivers, and 19 others allow children as young as 8 to drive them.
Shady stockbrokers and stock analysts have joined other con artists on the top-10 list of investment scams for the first time, says the North American Securities Administrators Association. Hucksters are taking advantage of the volatile stock market and luring victims who are looking for safe, yet lucrative investments.
Here are the top investment scams, ranked by NASAA in order of both prevalence and seriousness:
1. Bogus securities sold by unlicensed individuals, such as independent insurance agents.
2. Unauthorized trades or other shady practices by stockbrokers. Check your brokerage statements for unexplained fees or other suspicious items.
3. Pumped up research by stock analysts.
4. Promissory notes or short-term debt instruments often sold by independent insurance agents and issued by little known or non-existent companies, promising returns as high as 15 percent a month, with little or no risk.
5. "Prime bank" schemes, which promise triple-digit returns by providing the "secret" investments of elite banks.
6. Viatical settlements, or investing in the death benefits of the terminally ill
7. Affinity fraud, or scams in which con artists use victims' religion or ethnic background to gain their trust.
8. Charitable gift annuities, or transfers of cash or property to a charitable organization. While most charitable annuities are legitimate, be careful of those involving little-known groups.
9. Oil and gas schemes, in which people unknowingly invest in poor or non-existent oil and gas wells.
10. Equipment leasing scams in which victims are sold interests in equipment such as payphones or ATM machines.
Before you invest, call your state securities regulator to make sure the person offering the deal is licensed and the investment itself is registered. Find the phone number for your state regulator by visiting the Web site of the NASAA at www.nasaa.org .
Yvonne Wollenberg. Financial Beat. Medical Economics 2002;19:18.