Fort Worth Star-Telegram from Fort Worth, Texas (2024)

February 21, 1999

Publication:

Fort Worth Star-Telegrami

Location:

Fort Worth, Texas

Issue Date:

Sunday, February 21, 1999

Page:

84

Extracted Article Text (OCR)

1 wwwslar-telegramcom Sunday February 21 1999 3F MONEY WISE Credit cards offer car buyers rebates but also charge 18 interest1 fanning to buy a car new or used in the next couple of years? You might want to switch credit cards That's because two of the nation's STI biggest credit card issuers have programs that can save you thousands of dollars on your next car purchase But as always the buyer must beware Each program has restrictions And if you KATHY KRISTOF FAMILY FINANCES carry a large revolving balance on the card you could easily pay more in interest charges than you'll get in rebates Citibank one of the nation's biggest credit card issuers recently revamped its "Driver's Edge" card which offers cash rebates on car purchases The program previously allowed card holders to collect the cash only if they bought a new vehicle But on Jan 1 Citibank expanded the program to include used and leased vehicles whether you go through a dealer or private party The changes make Citibank's card far and away the most flexible of the car-buying rebate cards says Robert McKinley president of CardWeb a card research and information firm based in Gettysburg Pa However other rebate cards may also make sense most notably the General Motors card which has been the industry standard-bearer since it was launched in 1992 It isn't as flexible but it offers more generous rebates for those who want to buy a new GM vehicle Exactly what do you get from the cards and what do they cost you? Here's the skinny: Citibank actually supports two separate "Driver's Edge" offerings: the Driver's Edge Charter more than $4500 in interest nine times your rebate amount for that year If you paid your balance in full each month within the 20-day grace period there would be no interest charges The General Motors card is less flexible than Citibank's To redeem points you must buy a new GM vehicle However if a Chevrolet Pontiac Cadillac Buick Oldsmobile or GMC is in your future anyway the program has its advantages (You can't use the rebate points to buy a Saturn Saab or used vehicle) The most compelling feature is that you get five rebate points for every dollar charged on the card That means you have to charge just $10000 a year to earn the maximum $500 in annual credits You can accumulate points for up to seven years for a total of $3500 After that the points begin to expire To redeem points you go to a dealership and negotiate the purchase price of the vehicle Afterward tell the dealer you are a GM with you or be an authorized user on the card account With Citibank's Options card you get just one point per dollar of eligible expenses In other words you must charge $50000 annually to get the maximum $500 in points However you can accumulate the points for up to five years for a total of $2500 worth The other big difference with the Options card is that if you decide you don't want to get a car you can redeem expiring points for cash To redeem points when buying a car you mail in a redemption form and a copy of either a dealership bill of sale a lease agreement or the vehicle registration within 60 days of purchase Citibank will mail you a check What do these cards cost? That's the catch Neither charges an annual fee but the interest rate is prime plus 104 percentage points In today's market that's 1815 percent If you left a $25000 revolving balance on the card for a year it would cost you -'Investor's portfolio relies too much on domestic large-cap funds SHORT COURSE card holder and that you want to redeem your points The dealer' will call a card holder service number to get your point total and then deduct the corresponding value from the price of the car Like the Citibank card the GM card carries no annual fee but the interest rate is the same: a lofty 104 percentage points over prime Translation: If you left a $10000 balance on your GM card for a year the $l800-plus you would pay in interest would amount to more than triple your rebate Another caveat: The rules of any credit card rebate program can be rewritten at any time says CardWeb's McKinley ii Kathy Kristof is the author of Kathy Kristof's Complete Book of Dollars and Sense She welcomes comments and suggestions but regrets she cannot respond personally to every inquiry To contact her write Kathy Kristof co The hts Angeles Times Times Mirror Square Los Angeles CA 90053 kalhykrislofIalimesioni a short-term time frame few can predict with any great accuracy when the markets are at a high or a low But studies have been done that indicate that if an investor who is trying to time the markets has the correct general sense but misjudges them only slightly being a few days or weeks late in calling the highs or lows he or she will end up well behind the steady plodders who keep shoveling their money in The reason is that at least the past markets have tended to move very quickly when they are at extremes falling quickly when the ability to sustain highs have been exhausted and rising very quickly in the earliest days of a bull market And it's when the investor miscalculates on those precise points of time that he or slje loses ground to the dollar-cost-averagers Send letters including your name address and telephone number to: Kenneth Hooker The Boston Globe Boston MA 02107 0 FOR SALE DRAMATIC HILL COUNTRY IN NORTH-CENTRAL TEXAS Hills Valleys Sunflower Fields Woods 200-Acre To 400-Acre Tracts Available-Spectacular Views At 1350 Elevation Live Creeks Tanks Springs -t Mineral Rights For Gas Wells Abundant Deer Turkey Quail Dove Mature Live-Oaks Game Trails 15 Minutes South Of I-20 Off 281 For Morn Information Or Guided Tour Contact: SAM ROBERTS BROKER (254) 968-2406 Tigers and cats Acronyms for virtually the same product tigers and cats both are forms of zero-coupon bonds Treasury Investors Growth Receipts (TIGRs) were first created by Merrill Lynch They are US government-backed bonds that have been stripped of coupons (the part of a bond investors redeem for interest payments) Tigers sell at a deep discount pay no interest and mature at the security's face value For tax reasons tigers aremost effec 2 Member card and the Driver's Edge Options card Interest rates fees and other financial details are the same with both The only difference is how quickly you accumulate rebate points and how long the points last With the Charter Member card you get two points for every dollar in eligible purchases for a maximum of $500 worth of rebate points a year (You don't get points for balance transfers cash advances or items you later return) To get the maximum number of points you must charge $25000 annually The points can accumulate for three years a total of $1500 at which point you must use them or lose them On the bright side if you're still not ready to buy a car after the three years but someone else in your household is you can transfer your rebates to another member of the household It can be a parent spouse sibling or child but he or she must reside This would immediately cut your large-cap concentration to 729 percent You could then slowly chip away at that percentage by reallocating some of your monthly contributions I suggest you continue building your midcap position which is represented by Janus Special Situations and Sound Shore funds for most US on April 14 and say 'I'm ready' says Gardner "If someone is doing his own taxes it's pretty critical this year that he allow himself a little extra time to get familiar with the changes and take full advantage of what's available" Of course the other incentive for filing early is that you'll get a refund check earlier which may enable you pay off holiday debts faster or take that longed-for spring vacation (If you owe money it's better to know the amount in advance so you can make the payment on time and avoid possible penalties) Early birds will likely see a refund check three to four weeks after filing vs four to six weeks for the last-minute crowd says Joe Schwartz president of the AVA 6 AO I i I 1 tive in tax-deferred accounts CATS or Certificates of Accrual on Treasury Securities created first by Salomon Brothers work largely the same way To respond to these unofficial sources of zero-coupon government securities the US Treasury itself got into the act creating STRIPS (Separate Trading of Registered Interest and Principal of Securities) which are similar to tigers and cats The Boston Globe ited market experience and people with a very great deal of experience Between the two extremes falls the self-styled expert who is confident that he or she can assess market highs and lows closely enough to do better than the market itself When you reinvest distributions whether they are through reinvestments in a mutual fund or through a dividend reinvestment program associated with a common stock you have basically entered into a sort of dollar-cost-averaging program You calculate that a sequence of periodic investments will bring you an average cost for your position that reflects both high and low markets If it is a long-term program the result should be an average cost well below the value at the end of the period The suggestion that was made to you is as unassailable as the old market advice buy low sell high The problem is that nobody knows where the markets are going and especially in CD Maturing? Try an Alternative 6 Guaranteed One Year No Fees No Sales Charges Guaranteed Principal Interest Rate Available for IRA's or Regular Savings Dollars call nowjbr irjformation: Advanced Financial I Services Inc I 3800 Hulen Street Suite 1 10 Fort Worth Tuxas 76107 817-737-4044 Old West Annuity Life Insurance Company Boot West Emerald Ste 150 Boise Idalto 83704 All-CD-One (745) But I would divert the $150 monthly that's going to American Century Twentieth Century Ultra to new investments in two additional sectors First I would buy a small-cap fund such as Janus Venture or Vanguard Small-Cap Index Finally I'd build a position in a health care fund such as Vanguard Health Care If you achieved average 10 percent portfolio returns and continued your $350 monthly contributions you would have $991960 after 20 years when you are 62 Under the same assumption you would have $1227033 at age 65 Is it better to reinvest divi-Idends and interest pay ments automatically or to put mem in a money market fund using the money to invest when the market is at a low as someone has suggested? If these are long-term investments it seems to me that over the long term the first option would be as good as the second especially for a person who does not have a lot of market savvy JM Needham Mass Al think there are two classes of people who are attracted to the idea of religiously reinvesting distributions regardless of the state of the market These are people of lim- taxpayers California Society of Enrolled Agents Filing electronically though speeds up the process to around three weeks he says Gardner says taxpayers shouldn't overlook time-honored tax deductions such as: home mortgage interest home mortgage interest points property taxes unreimbursed employee travel job hunting costs professional tax preparation and moving expenses I am a 42-year-old self-6 employed roofing contractor My SEP IRA accounts conSht of $40000 in Vanguard Index 500 $11000 in Vanguard's Total Stock Market Index KENNETH $20000 in HOOKER American Century I Twentieth QUESTIONS Century Ultra i ANSWERS $13000 in Janus World -wide $10000 in Janus Special Situations and $4000 in Sound funds What do you think of these funds and the overall portfolio? I have been adding a month $100 each to Sound Shore and Janus World-nvidef and $150 to Ultra What do you estimate I will have at age? MT Arlington Texas There's no question that you ve picked solid funds but it also seems to me 'that you've picked too many of out of the same barrel The -Vanguard indexes American Century Ultra and the domestic side aof the Janus Worldwide portfolio Jwhich comprises 56 percent of the fund's assets) are all concentrated on large-cap investments k- Adding them I calculate that -you have 791 percent of your portfolio in the domestic large-cap Filing early The Associated Press -1 There's one way to buck the trend this tax season file your early 1 Each year millions of Americans wait as late as possible to prepare their income taxes The t-lnternal Revenue Service says it expects to receive about 36 million returns the week before and rafter the April 15 deadline t(That's nearly 30 percent of the 126 million individual returns anticipated) While it's understandable that 'those who owe additional taxes would want to put off the 'inevitable there's little excuse for 'anyone expecting a refund And "roughly 70 percent of all taxpayers should be getting money back "I think most people perceive it i as an unpleasant chore and any sector This sector has of course been the place to be for the last couple of years but for the long haul you'll want additional diversification I suggest you swap the entire position in Janus Worldwide for shares in Janus Overseas and also commit the $100 additional monthly investment to the pure international fund makes sense time you have something you don't like doing I think it's human nature to put it off as long as possible even though you're getting a refund" says John Gardner senior manager in KPMG's personal financial planning practice in Washington DC But Gardner and other tax professionals say it's crucial to get started as early as possible this year because of the many tax law revisions effective in tax year '98 There are changes to the Individual Retirement Account including the introduction of the Roth IRA new education tax credits including the Hope scholarship and Lifetime Learning credit and new ways of calculating taxes on long-term capital gains to name a few "Like it or not you're not going to be able to pick up a form FUIC Insured Minimum balance to open a CD and earn the stated APY (Annual Percentage Yield) is $1000 APYs are subject to change and are accurate as of publication date.

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