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Stocks, Teens, Bonds, Retirement
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The two biggest US stock markets toughened up their standards to make participating companies more accountable. The New York Stock Exchange and the Nasdaq Stock Market want companies listed on their exchanges to increase the independence of their directors. Under the new rules, a majority of board members must have no material relationship with the company. Also, shareholders must be given the opportunity to vote on executives' stock option plans. The rules are awaiting approval by the Securities and Exchange Commission.
The Sarbanes-Oxley Act, a new federal law signed by President Bush in July, also strengthens government regulation of publicly traded companies by creating a new federal accounting oversight board to supervise the accountants who audit public companies. It also requires company executives to certify personally the accuracy of reports filed with the SEC.
A new safety device will let you monitor your teenager's driving habits without getting into the car. The Road Safety On-Board Computer System, which is slated to go on sale beginning in October, will nag drivers about bad habits and keep a log to tattle on them later. The "black box" device will bark an audio warning if the driver accelerates too fast or drives too aggressively. It will also sound a warning tone if the seat belts aren't buckled or the driver backs up without looking.
When your teen comes home, you can take out the memory card to see how fast or carelessly he drove, where he went, and what time he got home. The suggested retail price is $280. The device plugs into a data link connector and can be used in any model vehicle with a connector port. For more information, go to Road Safety International's Web site at www.roadsafety.com.
A proposed bill would change federal rules that require seniors to start taking money out of their IRAs after they turn 70 1/2. The bill sponsored by Rep. Jim Saxton (R-NJ) would eliminate the mandatory withdrawals that are currently in place. Supporters of the measure say the current age target is unrealistic because it was created when seniors weren't working as late in life or living as long as they do today.
The US Treasury offers a low-risk bond that will protect your investment if inflation begins creeping up again. Your next chance to buy 10-year Treasury-Inflation Protected Securities comes up October 15.
TIPS are backed by the federal government and pay a real rate of return guaranteed to stay ahead of inflation. The principal value of TIPS is adjusted every six months to keep pace with the Consumer Price Index. Current TIPS pay a 3 percent interest rate. (The principal of the note will be adjusted every six months until maturity.)
You can buy TIPS for a minimum of $1,000 directly from the federal government at .treasurydirect.gov . You can also buy them through mutual funds. Several fund families, including Vanguard, American Century, and Fidelity, offer portfolios that invest in TIPS bonds and notes, along with other government securities.
|Fund||Minimum investment||Expenses||Year-to-date return|
|American Century Inflation-Adjusted Bond (ACITX)||$2,500||0.59%||11.2%|
|Fidelity Inflation- Protected Bond Fund (FINPX)||$2,500||0.5%||N.A|
|Vanguard Inflation- Protected Securities Fund (VIPSX)||$3,000||0.25%||12.2%|
Yvonne Wollenberg. Financial Beat. Medical Economics 2002;18:8.