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Jewish World Review May 25, 2000 /20 Iyar, 5760

Bruce Williams

Bruce Williams
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Consumer Reports


CDs for security, not investment -- DEAR BRUCE: In your column you continually say that mutual funds are much better than CDs, but isn't there a brokerage fee or percentage rate connected with these investments? I am not a savvy investor -- that's why I like my $10,000 CD, even though the return is very small. -- J.T., Las Vegas

DEAR J.T.: If you are satisfied with the very tiny return that the CD offers you in return for the security, so be it. However, there are mutual funds that you can purchase that are no-load, meaning no commission, although you will have to seek them out.

Why do you object to paying a small commission if your overall net return can be two or three times the return that you are receiving in the CDs? Granted, there are different levels of tolerance for risk, but it seems to me that most of us can afford to take some risk for a substantially higher return on our investment. CDs barely outpace inflation.

DEAR BRUCE: I wish I could tell you that I was a little old lady who didn't know any better, but I am a reasonably savvy adult woman who was too blind to see what my adult son was doing. Twice in the past year he has applied for credit cards in my name, using my Social Security number. He ran up the charges and then stopped making payments.

The first time it was such a shock that I borrowed money to pay off the $10,000 credit-card debt. Now just a few months later I have received another call about another large outstanding balance. My current husband advised me to ignore the calls.

I have contacted an attorney, and I have told my son that I will not pay these bills. I am concerned about my credit. Is there any way that I can assure that this doesn't happen again? -- G.J., e-mail

DEAR G.J.: To answer your last question first, I don't know how anyone can completely protect themselves from this type of abuse. Part of the problem is the proclivity for many credit-card companies to issue cards with only a cursory examination of the applicant. Having said that, simply advise the credit-card carrier that you will sign an affidavit of fraud and hold them civilly liable for any adverse credit information that may appear in your credit file, since none of this was any of your doing. I am sorry your son is such a deadbeat.

DEAR BRUCE: I am a pizza-franchise owner, and I wish to expand my business. I found an awesome site in an adjacent community, but the problem is that it was a gas station for over 30 years.

The state fire marshal's office does not require the tanks to be moved because they have not been in operation for many years, and because the tanks are not a regulated entity, the EPA does not require the tanks to be cleaned up unless they pose a health threat.

My attorney prepared a purchase agreement with indemnification language relating to environmental issues. I have tried to get environmental insurance without success. Could I form a corporation that would own the land and building, or just the land, and then lease the property to my pizza corporation? Would this protect me? -- T.S., e-mail

DEAR T.S.: You are savvy to recognize the environmental concerns. Since the tanks were not used for over 30 years, the likelihood is that any possible pollution problem has been dissipated. Having said that, there is no way that I would ever want that property to be in my name.

Your attorney is the guy who has to answer the question about putting the property in a separate corporation with the land, not the building, as the only asset. The building would then be owned by another corporation, which would lease to you.

In the absence of insurance, I would be a bit nervous. You might wish to dig a hole and view the tanks to see if there is any obvious evidence of pollution. The difficulty with pollution problems is that, in most cases, there is no statute of limitations. Whoever has the deepest pockets in the ownership chain is going to be zapped if a problem arises, and the indemnification language in your contract may have little value unless the corporation or person offering these indemnifications is a substantial citizen.

This is strictly a matter of finding a legal way to distance yourself through one or two corporations from any potential liability. If I could not be persuaded that this could be done, I would take a bye, even though the location is, in your words, "awesome."

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).


05/24/00: Battling with collection agency
05/22/00: Are callable CDs a waste of time?
05/18/00: Building a college fund
05/16/00: Even death brings no relief
05/15/00: House is 'worth' what's offered
05/12/00: Borrow from Mom and Dad?
05/11/00: Your heirs, your choice
05/09/00: Mutual-fund investigations
05/05/00: Credit cards vs. debit cards
05/04/00: Lawyer are good for something
05/03/00: The binding nature of contracts
05/02/00: You know you are in trouble when ...
05/01/00: Can primary residence be rented out?
04/28/00: A full refund after five years?
04/25/00: Get a homeowner's title policy!
04/24/00: Beware of errors in your favor
04/18/00: $10,000 limit on gifts
04/17/00: Invest or repay student loans?
04/13/00: Beware of Internet auctions
04/11/00: Six percent is a pittance
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...

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