Financial Beat

By Yvonne Chilik Wollenberg

Mutual Funds: The right share class for your fund—give class C the boot

Long-term investors should avoid class C mutual fund shares, which usually carry high annual expenses, says the American Association of Individual Investors. Although class C shares usually don't charge a front-end sales commission, or load, at the time you buy the shares, the higher annual expenses will add up significantly over a long-term investment.

Long-term investors should opt for class A or B shares, which have lower annual expenses. You'll probably have to pay a sales commission at the time you purchase class A shares, but the commission is often reduced or even eliminated for larger investments. Class B shares typically carry a deferred sales load, or "back-end load," which is levied when you sell the shares. But deferred sales loads are often eliminated if you hold the shares for at least five years.

Loans: Do you still shudder when you remember your closing?

If your mortgage turned out to be a worse deal than you expected, maybe you were taken in by fraud. The Mortgage Bankers Association of America has posted some warning signs of predatory lending at its new consumer education Web site (www.stopmortgagefraud.com ). Here are a few practices that should make you suspicious:

• You're asked to submit false information, or to leave signature lines blank.
• Your file is missing required disclosures, such as a good faith estimate or a truth-in-lending statement.
• At settlement, you have to pay unexpected costs.
• After settlement, you find that your monthly payments are higher than you expected.
• You're required to buy credit insurance that will repay the debt if you die or become disabled. Credit insurance is optional.

Visit the Web site to report suspected fraud, or call (800) 348-3931 to get information on how to file a complaint.

Stocks: Rein in your expectations—15 percent returns are history

You'll probably earn only about 6.5 percent a year from your equity shares over the next decade, says Standard & Poor's. Long-term prospects for the stock market appear subdued due to sluggish earnings growth, overpriced stocks, and expected interest rate increases.

A lower return could have a huge impact on your investments. For example, a $10,000 investment will grow to $163,665 at 15 percent over 20 years. But the total will be only $35,000 at 6.5 percent.

Internet: A safe site where children can learn something

Kids now have their own portal to the federal government's Web site at www.kids.gov. The new site organizes more than 400 kid-friendly links to government agencies, schools, and private organizations. Youngsters can peek at a new baby elephant at the Smithsonian National Zoological Park, take a virtual field trip to the FBI, and learn about an astronaut's spacesuit with NASA. The site will take students to the government's best research and homework-help sites, including the Encyclopedia Smithsonian and the US Census Bureau.

Cars: Maybe you can get out of your lease early

If you're sick of the car you're leasing, but still have many months left to pay, look for someone to take over your payments. Here are a few Web sites that have sprung up to connect lease sellers and buyers.

www.leasetrading.com
Sellers pay a $39.95 one-time fee to register, and a lease-transfer fee equal to 5 percent of the remaining lease payments. Buyers pay no fees.

www.leasetrader.com
Sellers pay $39.95 a month to register and up to one month's lease payment as a lease-transfer fee. Buyers pay a $24.95 application fee, which is refunded if they lease a car, and a $149 transfer fee.

www.swapalease.com
Sellers pay $49.95 to register for 45 days, and can renew for $24.95 for unlimited time. Sellers also pay a $95 transfer fee. Buyers pay $24.95 to register for 90 days, but pay no transfer fees.

Before you list, find out whether your financing company will allow you to transfer your lease and what fees it will charge. If you're buying, have a professional inspect the car, and check its value at a car-pricing Web site such as www.edmunds.com or www.kbb.com .

Debit Cards: Punching in your PIN could cost you money

If your debit card carries the Visa or MasterCard logo, your bank may charge you a transaction fee of up to $1.50 to use your personal identification number rather than signing to make a purchase, says Cardweb.com, an online bank card research company. Merchants, however, want you to use the PIN, since that lowers their cost. Check with your bank to find out whether it charges for debit use on purchases.

Travel: There's relief nearby from ride-frenzy

Nothing is more exhausting than spending a hot day at an amusement park with over-excited kids who've had too much junk food. Until you get to that huge parking lot where the cars all seem to look like yours. Instead, head for one of the many on-site hotels that are opening at amusement parks around the country. Stay-and-play packages help you get the kids to bed, and also give you a cool place to take a break when the kids get too cranky. Here are a few parks that offer on-site accommodations:

Universal Studios in Orlando (www.universalstudiosvacation.com ) has three on-site hotels: the Portofino Bay Hotel, Hard Rock Hotel, and the new Royal Pacific Resort. Hotel guests can bypass the lines at the park by showing their room key, and get free transportation to the theme and water parks

At Busch Gardens in Williamsburg, VA, (www.buschgardens.com ) you can stay at the Kingsmill Resort on park grounds. Guests get a free shuttle to the park and to Water Country USA.

The Knott's Berry Farm Radisson Resort in Buena Park, CA, has a "Camp Snoopy Kids" wing with theme-rooms and bedtime stories. The hotel is an easy walk from the rides and other attractions at Knott's Berry Farm ( www.knotts.com ), and offers a free shuttle to Disneyland in Anaheim.

Guests at The Hershey Lodge get a free shuttle to Hershey Park in Pennsylvania ( www.hersheypa.com ) and a breakfast with Hershey product characters.

If you stay at an on-site hotel at Cedar Point (www.cedarpoint.com) in Sandusky, OH, you'll get to ride on the Wicked Twister and Millennium Force rollercoasters before the park opens.

Time Shares: Buying into a vacation resort might not be a bargain

Don't buy a timeshare at your favorite vacation spot if you're looking to make a profit, says Timeshares.com, an informational Web site. The value of a timeshare week on the resale market is roughly half the developer's current sales price. You'll probably get a better deal if you buy from a timeshare owner rather than from the developer. You can find resale listings at several Web sites, including www.timeshares.com , Timeshare Users Group (www.tug2.net ), and TimeSharing Today, an online magazine at www.tstoday.com .

Timeshare ownership also involves extra costs, including taxes, maintenance fees, and club fees, which normally range from $300 to $500 a year. Also, it can cost up to $250 to exchange your week for time at another resort. For more information about timeshares, visit the American Resort Development Association's Web site at www.arda.org.

 

Yvonne Wollenberg. Financial Beat. Medical Economics 2002;15:14.