THANK YOU ALL

Thanks to all who replied to my panicky call for help in coming to terms with my mother's broker. It is painful to witness the process whereby she has been--and is being--manipulated by this man. 

I am amazed that my little blog, which has a very small footprint in the big world of blogging, should attract people so willing to share their expertise. It means a lot to me that my misgivings and suspicions have been corroborated by others.

My father, whose death propelled my mother within a few weeks into the "arms" of a broker to whom she gave total control of her assets, would, I am sure be horrified. I began this blog a few months before my father's sudden and unexpected death. In rather ironic timing on the part of the universe, my father died in November 2008, in the midst of panic about the Great Recession, revelations about Bernard Madoff, and an uncertain future for many.  My father and I had, to be plain, a terrible relationship, which still pains me to  contemplate.  But he was very good at finances and enjoyed managing his money. I learned a lot from watching my frugal dad. 

Question About Mom's Broker...Help!

I know I usually write about thrift shopping, so the readers out there might not have any answers. But  you had such good advice about my dental woes (actually dentist office woes) that I am back with a bigger issue.

Backstory: After my father died unexpectedly in 2008, my mother gave her taxes to an 80 year old accountant recommended by a neighbor. (Note: the accountant is recently deceased. He understated my mother's income in 2012 by about 75%--less than the lowest social security--which has made her liable for huge penalties and interest fees.)

The accountant recommended his broker. Within a day, my mother had given the broker part of her money to manage. He now has 100%. At our initial (and only) meeting, he was very evasive about compensation etc.

I have been worried about this guy over the years since my mother has no idea what her holdings consist of, what her rate of return is, etc. I spoke to him on the phone last summer and asked him a few questions and he told me "Your ego is too involved." He didn't answer the questions.

Luckily, my brother who has been uninvolved now ways we should look over the broker's records. Since my mother likes and trusts men more than women (she says this! to me!), this is good.

So, with her permission, I sent the broker these questions.

1. What specifically are xxx 's holdings? For instance, there is a category TIAACREF[note, the broker had my mother remove her TIAA money; it is now under the broker's mangement)--what are the specific holdings under that rubric?

2. What is the asset allocation? 

3. For stock holdings: what percentage is in mutual funds and what percentage is in individual stocks?

4. What percentage of assets is in IRAs and similar pretax vehicles? What percentage is in post-tax?

5. What kind of turnover does her portfolio have? How many sells/buys have been engaged in?  What are her total transaction/investment expenses for 2014? 2013? 2012?

6. What is her total return for 2014? 2013? 2012?

Thank you for your attention. We look forward to hearing from you.

Here is the reply: Good questions.  I think it is time to reevaluate the portfolio.

Any suggestions about how I might reply to this? Anything I should do?

Little Guy Fights Back!

Did you miss this uplifting story? A small investor fought back against the big hedge fund managers and may make a difference. If you link to the story, you can also link to a recording of his argument before the court. Believe it or not, I listened to it.

The whole 2008-09 financial debacle only reinforced my feelings that all is rigged in favor of a small group of rich, powerful, and connected. I am a good saver and all, and I engage in frugal practices, but ....trying so hard not to whine.

So hats off (my hat, anyway) to Mr. Thoma. He did a lot of work poring through company records.

My First Investments!

Not really: I've been buying mutual funds for a long time. I decided to let Frugal Son guide me, mostly because he doesn't have very much by way of investible funds.

So my first purchases are

PGH (a utility)
GE (you know, General Electric)

I did this through a Vanguard brokerage account, which Frugal Son helped me set up (actually, it's simple). I only pay $7.00/trade.

After witnessing the performance of financial professionals--with both my in-laws and now my mother--I figure I might as well trust the advice of my guy.

Needless to say, most of my retirement money remains in good ole index funds. I'll keep you posted on my progress--or regress.

Favorite Books of My Financial Adviser...errrrr....Son

I conducted a short interview with my financial adviser (Frugal Son) via chat.

Me: What are your favorite finance books?

Son: So far my favorite has probably been Bogleheads. I'm also reading a book right now called Warren Buffet and the Interpretation of Financial Statements, which is shaping up to be pretty good. And the way I choose my stocks is, so far, very simple, but will hopefully get a little more involved once I'm finished reading this book.

Right now, I look for a P/E ratio that is not too much higher than 15 an consistent, positive EPS. I like dividend paying stocks, so I look for companies that have a history of paying dividends even in down economies. I also like stocks that have a price-to-book ratio of near or below 1 (ideally).

Me: So it's not brain surgery.


Son: Nope. That's about it. This latest book is teaching me how to look at underlying financials to get a better idea of the financial state of the company like about debt ratios etc., but the price-to-book ratio below 1 is nice because theoretically (emphasis on theoretically) that means that even if the company goes bankrupt you won't lose money theoretically.




I am amazed.

Frugal Son has a Net Worth!

So, fingers crossed, Frugal Son is about to graduate from college. He went to State U, incurring costs of zero. I had a lot of ambivalence and conflict about his not going the private route, probably more than he did. As far as I can tell, he is no more or less happy with his choice than other kids he knows, whether they chose private or public school.

Over the years, he has amassed bits and pieces of cash, either from working, or from gifts. This last year, he decided to buy stocks and utilities! He is ahead of me, since I've stuck to mutual funds in my fearful way.

He informs me that his net worth, some of which is in a Roth IRA, is a little over $16,000. And he has no debt.

I think this is a good start. In fact, he's bugging me about letting him choose investments for ME. I think I'm going to buy a few things.

MY SON THE FINANCIAL ADVISER. Any mom would be proud. Of course, I'm his only client and he's doing it pro bono. Credentials: a BA in English. Wow!

Two Amazing Reads on PF and Frugality: John Bogle and Une Femme

Oh, how I love John Bogle of Vanguard. He is an inventor and proponent of index funds and investing principles so simple that a 5 year old can comprehend. I just read an interview with him that, as always, impressed me. Bogle, by the way, saved my sanity during the financial meltdown, when I witnessed all my savings/investments lose tons of money. In one of his books, he says "Things always revert to the average." That's the argument for index funds also.

Next up: the great blogger Une Femme d'un Certain Age. I discovered her blog over a year ago when I strayed from my usual reading on frugality. Well! As the Wife of Bath says (paraphrased), women do tend to wander by the way. Une Femme is a writer of great talent, with a great eye for style as well. She also writes on more serious subjects, even when she seems to be writing only on style.

Anyway, yesterday when I returned to the blog world after having been out of town for a good bit, I discovered that Une Femme took on the topic of----FRUGALITY. And, guess what? She was inspired by one of my posts. I am so honored.

Her post is one of the best statements I've seen on frugality, which has to do with good use of resources--not just money, but time, stuff, and so on.

I wish Une Femme would write a book. In the meantime, Bogle has penned many. Here is one I've read.

And this one.

Time to Buy Real Estate?

Just reading CNN and came upon this article. Australians are buying US rental properties in depressed markets as investments. Places include the usual suspects: in addition to Tennessee, which is featured, we have Florida and Arizona.

Could this mean that if you have cash (as the Australians seem to), the best thing would be to buy another house in addition to your underwater home bought during the bubble?

My mother's Florida condo, bought 16 years ago for the price of a Long Island ranch home, is now worth less than the initial cost, while the Long Island home, I'm sure, is worth much more, in spite of the bubble.

Somewhat facetiously, one could call this dollar cost averaging with real estate. The only problem, of course, besides the risk of any real estate investment, is that you need wads of cash. Which Australians do, evidently.

Is this a mad idea? Would you buy rental property in depressed markets if you had some cash?

5.25% Checking Account: Not Buying It

Today I received a tempting email from my credit union: 5.25% checking! That's amazing these days: my Vanguard money market is at .1% (if that); my high-yield savings is at 1.3%; I am considering a 1.9% CD.


With La Cap's All Access Advantage checking account, you have the chance to earn dividends as you make purchases.* With no monthly fees and no minimum balance, it's a great way to make the most of your checking account. It's just our way of showing you that we care about giving you the best rates and services possible.

Open an Account Now

*APY = Annual Percentage Yield. La Cap Checking (Share draft) Accounts are variable rate accounts. La Cap may change the dividend rate for your account as determined by the credit union Board of Directors. Dividends are posted and compounded monthly. No minimum balance required to maintain the account. Applicable fees and conditions could reduce the earnings on your account. Qualifications to earn dividends: - 25 or more non-ATM debit card transactions posted per month: - 5.25% APY on balances up to but not exceeding $5,000 - .15% APY on balances exceeding $5,000. If qualification stated is not met: - .15% APY on entire balance.

Read the fine print. The offer is only for your first $5000.00 and you must make at least 25 non-ATM debit card transactions per month.

Let's do the math. If you have the whole $5000.00, you can get about $262.00. That's nothing to sneeze at.

Let's do the math some more. The earnings total about $5.00 a week. That's much less tempting. I don't have a debit card; I don't buy something 25 days of the month. For $5.00 a week, I can do other things that I enjoy more than keeping track of debit transactions.

I can go to Big Lots and save $5.00 on food. Ditto for looking at the grocery ads and planning my menu around something on sale. I can check 2 movies out of the library. I can hand wash a sweater rather than sending it to the dry cleaner (I do that anyway). You get the idea.

Since I find keeping track of things extremely stressful, I don't use that supposed Holy Grail of frugality: the grocery coupon. I don't know how to sew and am glad that, because of a small fire in the home ec room, I never had to finish my skirt, since I was on my way to getting a bad grade.

There are so many ways to be frugal! Aren't we lucky that we can find ones that suit our temperaments? Which are your favorites?

Why Would I Want to Refinance a Paid-Off House: A Financial Fantasy

As an expansion of my last post, which struck many as mad.

Here is the fantasy. Let's just say I did a cash-out refinance* for about, ohhhh, 1/4 of the value of my paid-off house. Let's say, I just put it in an insured CD. At that point, I'd be paying about 2-3% on my loan, the difference between the CD and the super-low mortgage rate.

Let's say I kept rolling over the CDs as they matured. I have a feeling that rates are going to go up, at least some time in the next 30 years.

What is the origin of this fantasy? My parents got a 5% mortgage in the early 60s. Their Principle and Interest payments were minimal. In the 70s--when I was in grad school and had NO MONEY--interest rates went through the roof. My parents and many others were able to invest in newly-available bank money market accounts that were paying 20%. Even Treasury Bonds--risk-free then as now--were paying in the teens.

Still thinking about it, though I'm probably toooooo lazy to go through the process.

Does my financial fantasy still seem mad?

*Cash Out Refinance is when your mortgage includes CASH. My friends in the biz were urging such a refi during the housing bubble--for college savings, for kitchen remodels, and the like. If you've kept up with the news, you will see many stories of families that ended up owing $500,000 on a house they originally paid $100,000 for. The other $400,000 (based on the house's appreciation) went to vacations, tuition, credit card debt, Viking stoves, major remodels, SUVs, and Coach bags.

Good CD rates?

So, readers, what do you think of these rates from First Guaranty Bank:

2 year 2.75%
3 year 3%
4 year 3.25%
5 year 3.5%

Strangely, they don't have 1 year advertised.

Would you bite (and if so, which maturity) or would you wait?

Microsavings

Once again, I am inspired by Funny About Money, who, in a recent post, mentioned that her financial advisor opined that she had a talent for small savings.

I think I have a talent for microsavings. Many bloggers, whatever their take on frugal tips, declare that the big savings are what count: mortgage, insurance, travel, car purchases, and so forth. Elizabeth Warren and Daughter say the same in All Your Worth: The Ultimate Lifetime Money Plan" Count the Dollars, Not the Pennies.

Of course, I'd rather save dollars than pennies. But it's not always possible: only the microfrugalities have a guaranteed and steady payoff.

On insurance, for instance. I live in a state where some former Insurance Commissioners reside in prison. I have known several people who had insurance from smaller companies that went out of business, leaving them with unpaid medical bills and car insurance claims. Because of this, Mr. FS and I have always bitten the bullet and stayed with national companies. Post-Katrina, we had little trouble.

On travel,too. Yes, we use the on-line sites for deals. Often poor Mr. FS will spend hours on plane fares, only to end up saving $15.00, or worse, watching fares go UP. Sometimes he does quite well, but sometimes it's a waste of time. And it's never guaranteed.

On the auto purchases, yes we got the prices from Consumer Reports and used them well. But you can't do super-well on cars that are in high demand for good reasons. So we are happy with our Camry (1998) and Civic Hybrid (2003), both bought new for good, but not great prices.

But every week, I can save at least 20% on groceries, just by picking up the loss leaders. This amounts to pennies, but week in and out, year in and out, it adds up. I can always save pennies.

The only guaranteed way of saving dollars these days seems to reside in paying off your mortgage. I guess it's a good thing I already did that. I'd love to hear about other strategies.

So, dear Readers, do you think my concept of microsavings works? How do you microsave? And, if you have bigger ways to save, of course, please share.

Talbots: New Style, New Stock?

This is a rather rambling post. It ends up asking a question about how to pick stocks. Gender issues in finance and aesthetics are also raised.

Before I began this blog, I spent some time reading blogs by people interested in frugality and personal finance. These piqued my desire to write on the topic myself. But lately I've found some new blogs that I like on the topic of style for women "of a certain age." Two favorites are Une Femme d'un Certain Age and Passage des Perles.

I will now reveal how I happened upon these. I had noticed that Talbots had updated its style. My mother, age 78, has long been a Talbots shopper, but I think that's because she summers in the Berkshires, and the store, with its New England vibe, reminds her of her Boston girlhood. When we would visit the Lenox branch, my mother would shop, while I, age 55, would make an effort to find something halfway decent to try on. My daughter, age 18, would sit in a chair reading In-Style magazine. You can gauge the demographic from this scene.

Last summer I was amazed by the new fall clothing coming in. These were things I might even buy (on sale, of course). Then, in the fall, as my retirement accounts continued their precipitous decline, I thought, I should buy Talbots stock. Now, I don't own any stocks, because--chicken that I am--I always stuck to mutual funds.

The only other stocks I ever wanted to buy were Home Depot (20 years ago!) and Big Lots (about 5 years ago!). I didn't buy either, but should have.

So I googled "Talbots stock" and discovered that the Motley Fool fellows picked it as their Halloween stock--scary, scary, scary. The price was about $1.80/share the day I started thinking about this.
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Then I googled "Talbots new style" and discovered Une Femme and, through that blog, Passage des Perles. Une Femme d'un Certain Age, especially, admired the newly chic style brought in by the new president of Talbots.

The Motleys are, needless to say, men. The bloggers are women. The stock is now $3.06, a rather impressive percentage rise in a few months, especially given the economic news and the further precipitous declines of nationwide retail sales and my retirement accounts.


I bought some items yesterday, since I got a further 20% off the sale prices and free shipping. I don't know how any of these will look, but I can always return to the store in the next town. What do you think of my choices?








So Ladies and Gentlemen of the Jury: do you think Talbots has a future? Would you buy the stock? Do the chic women bloggers know something that the investment professionals do not? Did I make the mistake of buying the sweaters rather than the stock?