Jewish World Review April 11, 2000 / 6 Nissan, 5760
Six percent is a pittance
DEAR BRUCE: In one of your recent columns you stated that you didn't see why anyone could not earn 15 percent to 20 percent on investments today. I am amazed that you would say something like that. I am currently earning under 6 percent in my CDs. Where do you buy yours? -- J.T. (e-mail)
DEAR J.T.: I never said that I invested in CDs, and further, you use interest only as a common denominator of speech. You are not going to earn 15 percent or more in pure interest.
However, it is not difficult in today's marketplace to earn in excess of 15 percent in GROWTH. In taking a look at many of the major companies over the last year, you will see that their stock prices have increased well over 15 percent. A prudent investor over the last year could easily have matched that.
The problem is that many people aren't willing to take any risk. In the event that you are not willing to take any risk, you are destined to receive a pittance of earnings. That, to me, is a tragedy.
DEAR BRUCE: I am not sure what to do about my automobile insurance. One of my neighbors told me that I was foolish if I notified the insurance company that my twin sons were turning 16 and that soon they will be able to drive. On the other hand, I have always been led to believe that if you didn't tell the insurance companies of a new risk and something were to happen, they might be able to "skinny out from under" or give you less coverage.
The premium that they are asking for now is outrageous, but what am I to do? -- L.W., San Antonio, Texas
DEAR L.W.: Welcome to the real world. I remember when I turned 17 and my father's insurance rates went through the roof. He was not a happy camper. As history repeated itself and my sons turned 17 I was equally unnerved, but not outraged, because I knew it was coming.
Although young drivers don't have more accidents than their older relatives and friends, the unfortunate fact is that when they do have accidents, they are far more severe. As a consequence, the insurance industry wants to get paid more money to undertake those risks. I have yet to find an insurer that would be unhappy if they never had to insure a young male driver.
Unhappily, you must grin and bear it. You can't afford not to have the insurance.
DEAR BRUCE: I know that you are a private pilot, so I would like your advice on something. I have recently received my license, and I am thinking very seriously about buying an airplane. I can afford it, but the question is, is it a smart thing to do? I have been told by an airport operator that I could lease it back to him for flight instructions and earn a good deal of money. What do you think? -- L.P., Tulsa, Okla.
DEAR L.P.: Almost everyone who owns a private airplane has been approached by some aviation school to lease back the plane for instruction. From the point of view of the school, it's a good deal. They get to use the plane on an hourly basis with no investment. Whether it's a good deal from the owner's perspective is quite another matter.
Personally, I prefer not to have my airplane used by students, who may make hard landings and other demands on the airplane that I would prefer were not made.
As to whether it pays to own an airplane, it's sort of in the same genre as, `Does it pay to own a boat?' It probably never pays. It's an extravagance; but if you can afford it, it's a great deal of fun.
Even the lesser expensive airplanes, before you get done, have to cost you in the neighborhood of $10,000 a year to own, including hangar rates, insurance and operating expenses. If you are only going to be flying 40 or 50 hours a month, although you will not have the same equipment and it will not be in pristine condition, it would probably pay to rent by the
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
04/10/00: Married couples should share windfall
04/07/00: How not to blow an inheritance
04/06/00: Get genetic screening for Tay-Sachs
04/05/00: Beating the look-back period
04/04/00: Providing for retirement
04/03/00: Readers disagree on time shares
03/30/00: The road back to good credit
03/29/00: Pre-tax dollars in IRA taxed later
03/27/00: Gambling on business ventures
03/22/00: Old cars as hobby, not investment
03/20/00: Tax on foreign gifts?
03/16/00: How to buy government bonds
03/13/00: Buying treasury instruments
03/09/00: Subcontractors must pay S.S.
03/08/00: Real-estate lawyers are essential
03/07/00: Don't expect compensation for ideas
03/06/00: Too rich for a Roth IRA?
03/01/00: Is time-sharing a scam?
02/29/00: Paying for nursing-home care
02/28/00: Rely on a real-estate lawyer
02/23/00: Keeping child's money safe from divorce
02/16/00: Just how important is a 401(k)?
02/14/00: Shaky partnership buying house
02/11/00: Protection by residential zoning
02/09/00: Benefiting from a reverse mortgage
02/07/00: Ensure your insurability
02/04/00: Absurd community zoning laws
02/02/00: Money or securities?
02/01/00: Can we KO a custodian?
01/31/00: Why sell a home you love?
01/26/00: Everyone needs a will
01/25/00: Will splitting stocks affect rollover?
01/24/00: Should early retirees contribute to SEP?
01/21/00: Strategies for paying off debt
01/20/00: Is 15-percent growth achievable?
01/19/00: Selling a second home
01/18/00: Running from a time-share
01/14/00: Don't be a spendthrift!
01/13/00: Who gets the house?
01/11/00: It all depends on size of estate
01/06/00: Check references before hiring an advisor
01/04/00: Savings bonds a bad investment
12/31/99: Out of state ain't that great
12/29/99: Warranty rip-offs
12/27/99: Checking up on investment handlers
12/23/99: Options good only when company's strong
12/20/99: Capital gains tax sometimes best
12/17/99: Don't give up your nest egg
12/15/99: Small-claims court no panacea
12/13/99: Termite company not liable for termites?
12/10/99: Services provided must be paid for
12/06/99: How do we minimize house-sale gain?
12/06/99: Maximize your tax shelter!
12/02/99: My neighbor won't maintain even a modicum of civility
12/01/99: Long-distance rentals a bad idea
11/29/99: Mortgage strategy A-OK
11/18/99: Students can work and learn
11/16/99: Value is what will sell
11/11/99: Y2K: No big deal for real estate
11/08/99: Real life is tough luck
11/03/99: The right time to cash a savings bond
11/01/99: Slow road for savings accounts
10/29/99: What do you want from insurance?
10/27/99: You have a right to see your tax forms!
10/25/99: Why own a house at 65?
10/22/99: Online fine, but CDs?
10/20/99: Love, honor -- and separate credit
10/18/99: Find the value of your stocks
10/15/99: Property lien prevents trade
10/13/99: Clear up debt, only then tie the knot
10/11/99: If it ain't broke...
10/04/99: Should I stick with the company IRA?
10/04/99: Get a financial education!
10/01/99: Insurance: Not much one person can do
09/30/99: Lost tickets are lost cash
09/29/99: Trusting only one financial planner
09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
09/03/99: How can I work out my IRS payments?
09/01/99: When your company can't pay you
08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...