Money Management

Which rail pass for European travel?

Q I'm off to Europe in a couple of months and expect to divide my time among four or five major cities. Which of the many varieties of rail pass should I choose?

A That depends on several factors, including how long you'll travel and where you'll go. Eurailpass is the most familiar pass, but it's also the most expensive: For 2001, a 21-day pass that lets you travel first class in 17 countries costs $718 per person. You'd pay $654 for a Eurail Flexipass, which may accommodate your planned itinerary equally well. The Flexipass gives you 10 days of travel in a two-month period.

If the cities you're visiting are in France, Germany, Switzerland, Spain, and Italy, you might want to opt for a Europass, which costs $348 for five days of travel within those countries over two months. For an additional $60, you can add one of the following: Austria-Hungary, Belgium, Greece, Luxembourg, the Netherlands, or Portugal.

However, if you're satisfied to travel second class, you might do better to buy individual tickets rather than a pass. Many Internet sites can help you sort out the alternatives and buy passes or tickets. Good places to start include goeurope.about.com (search for Eurailpass), www.europass.com , and www.ricksteves.com/rail .

Apprising investors of mutual fund taxes

Q I've noticed that some mutual funds are complying with a new SEC requirement to provide information on how taxes affect their investors, but many funds aren't. How come?

A Generally, funds must include the prescribed information in updated or new prospectuses and registration statements issued after Feb. 14, 2002. But starting this October, all fund ads and sales brochures must comply with the new rule if they claim that the fund tries to limit or control the effect of taxes on performance. Money-market funds are exempt from the regulation. So are funds using prospectuses exclusively in connection with 401(k)s and variable annuities, because such investments aren't affected by current taxes or have different tax consequences from ordinary taxable investments.

Funds subject to the rule must present a table showing before- and after-tax returns on both short- and long-term distributions and sales transactions, based on the highest tax rates prevailing at the time. This facilitates fund-to-fund comparisons, even though your actual tax bracket may be different.

When a buyer defaults on a home sale contract

QThe couple who signed a contract to buy my house now claim they can't go through with the purchase because their stock market losses would make it impossible for them to carry the mortgage. They want me to return their $10,000 deposit, even though the contract contains a "liquidated damages" clause. Where do I stand?

A Your state's law may limit the effect of such a clause. But generally it entitles you to keep the deposit as "reasonable" compensation for damages if the buyers fail to perform on the contract, unless the contract is subject to a contingency that can't be fulfilled. For instance, you'd probably have to give the buyers back the $10,000 if the purchase is contingent on their obtaining a mortgage that they're no longer eligible for.

You or your agent should contact their lender to find out, since it's conceivable that they're motivated by "buyers' remorse," rather than depleted assets. But if there's an eager purchaser waiting in the wings, the defaulting buyers might sue you for the $10,000 on the grounds that you haven't suffered any damages. In that case, consider assuring them that you'll refund the deposit when the sale to another buyer goes through.

Edited by Lawrence Farber,
Contributing Writer

Do you have a money management question that may be stumping other doctors, too? Write: MMQA Editor, Medical Economics magazine, 5 Paragon Drive, Montvale, NJ 07645-1742, or send an e-mail to memoney@medec.com (please include your regular postal address). Sorry, but we're not able to answer readers individually.

 

Lawrence Farber. Money Management. Medical Economics 2001;17:122.