<BreadWithSpam[at]fractious.net> wrote in message
news:yobzn7ftm8f.fsf[at]panix2.panix.com...
- quote -

I thought I understood a little of the guy's financial situation from the
original post. He has no debt, he has a secure job, and planning for
retirement is probably in good shape. The guy has two young children. I
didn't think it took any special knowledge to suggest that the guy save for
his children's post-secondary education.

Still, if you thought you needed more information before making any
suggestions, then asking for more information is a better response than
telling someone to put the money in the bank. To tell someone to put the
money in the bank is assuming you already have enough information to make a
suggestion.

Elizabeth Richardson

Richard Cline <dcline[at]silcom.com> writes:

- quote -

The problem is that we hardly knew anything about the
guy's situation. The OP came back later and offered
a bit more info, but the whole discussion about whether
to put the money into a savings account or not was
built on the idea that, given no other knowledge of
the guy's finances, that was the only reasonable advice.

Now, if you know more about his situation, there are
lots of other ideas.

But that's not the position we were in.

It has nothing to do with "professional advisor" or not,
but rather with "irresponsible advice" or not. Knowing
nothing about folks situations leaves one with very little
useful advice to offer besides "spend less than you
earn" and "build up some cash savings". Those are almost
always good and safe advice and if cash is built up or
held onto during the short term while we learn more about
the situation, that's perfectly sensible. But if we
presume to suggest, say, equities, and then find out
a week later that, well, the guy has no emergency savings
and is sitting on a heap of credit card debt, we've done
him a huge disservice. On the other hand, if we tell
him to stick it in cash and then find out that he's
well set with no debt and an emergency fund, we can talk
safely about rolling that cash into balanced portfolio.



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"Brent D. Gardner, ChFC" <bgardner20[at]cox.net> wrote in message
news:qDLwc.22281$%T.7812[at]okepread05...
- quote -

Putting money in a bank account IS accepting risk. For a professional not to
recognize that, and not to advise his client as such, would be actionable.
For you, a professional, to suggest that saving for college is unwise, is
astounding. As you mature, you will find that just because you are a
professional does not mean you have all the answers. Sometimes a lay person
with a spell checker can do a good job, and other times that lay person will
seek the advice of another. Even after seeking the advice, and therefore
acquiring more information, the smart lay person will keep his own counsel.

Elizabeth Richardson


======================================= MODERATOR'S COMMENT:
We are close to requesting this thread switch to private email.

- quote -

Brent....Im not a financial expert at all....but find
your advice illuminating.

So you are suggesting saving money for college..... but
NOT in anything that is in the kids name, correct?

Instead you advise saving it in the parents or some
adults name, right?

In article <qDLwc.22281$%T.7812[at]okepread05> , "Brent D. Gardner, ChFC"
<bgardner20[at]cox.net> wrote:

I tend to agree with Elizabeth that putting the money in a bank account
guarantees that it will lose purchasing power. It may be that the bank
account is the advice of a professional as they have a primary rule to
avoid big mistakes. As I am not a professional, I can feel free to
offer advice where one has an opportunity to make an actual profit. I
would look at dividend paying securities. Many of them offer 3%
dividends and a high probability of growth in value. The downside risk
is small but not negligable.

I am certainly glad that I did not have a professional advisor during
the years when I started investing.

Dick


- quote -

"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote in message
news:y7kwc.7973$Gx4.4164[at]bgtnsc04-news.ops.worldnet.att.net...
- quote -

There is no need to re-read anything. Your advice may have been well
intentioned, but it was not well thought out, and your criticism of others
was unnecessary.

Saving for college is often a mistake. Saving to save is always a good idea,
but earmarking it for an expense that may never be incurred, and where the
earmarking devalues free and subsidized sources is dumb.

- quote -

Nobody on here has a complete set of facts. Therefore, the BEST advice
ANYONE can give is to put the money in a bank account. To tell one to accept
more risk, without a complete set of facts, borders on lunacy, and is an
actionable offense for a professional.

Loans for college are a fact of life. Avoiding them would mean avoiding
college alltogether, for the majority of students. Obviously, you are
unaware of how most people pay for college. Since I practice in this area
daily, I'm totally aware.

Financing with a return on investment greater than the cost of money is
generally a good idea. That is how capital is created, including
intellectual capital. To suggest avoidance of debt at all costs is ignorant
of financial reality. Do the math.

Bottom line: Your advice was ill placed, inappropriate, and potentially
VERY EXPENSIVE.

On the other hand, the link I provided is to a book written by the nations
leading expert -- someone I know personally -- Ray Loewe.

http://www.amazon.com/exec/obidos/AS...&link_code=as1

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

"Brent D. Gardner, ChFC" <bgardner20[at]cox.net> wrote in message
news:PE8wc.21044$%T.428[at]okepread05...
- quote -

I think you should re-read what I wrote. I suggested that the gentleman
should save for his children's education. He should find a vehicle to do so.
I suggested several methods, not just government sponsored, but also a
mutual fund in his own name. Would that be potentially "very expensive" or
could it also be potentially inexpensive? If so, please explain.

It would seem to me that your suggestion of just putting it in the bank
might be the most expensive vehicle, due to inflation and thus loss of
purchasing power. Also, encouraging debt before someone even has income
producing ability seems a irresponsible. Student loans should be avoided
whenever possible because of the debt prone mindset they create.
Demonstrating the power of savings and encouraging a student to earn merit
based scholarships is a better way to foster lifelong success

Elizabeth Richardson

"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote in message
newsrFvc.25750$_k3.662438[at]bgtnsc05-news.ops.worldnet.att.net...
- quote -

The above is potentially a VERY EXPENSIVE mistake.

The average person should not save for college using government sponsored
vehicles. Having analyzed several hundred situations, and consulted with the
leading college funding expert in the entire country, the best place for
cash is often in the bank of the parent. Most college funding plans are
created as a sales tool for the industry, and as a political football to
boot through the opponents uprights when somebody needs some good press.

The bulk of college educations are financed, and money in the kids name
(i.e., UGMA/UTMA, 529, CESA, pre-paid tuition) REDUCES eligibility for the
better loans, REDUCES eligibility for grants, and REDUCES eligibility for
need based scholarships.

If one wants to maximize their eligibility for free/low cost loans, grants,
and scholarships, they want the student to be broke, or as close to broke,
as possible. Parents and grandparents need to forget gifts, unless estate
taxes are looming big, because that's just a plain dumb mistake that is
unfortnately too common because too many people are going to their
accountants for financial advice in areas that accountants often aren't
fluent, or they are reading financial porn and accepting it for the gospel.

The best book I have found for this subject was written by the nations
leading expert, Ray Loewe. Here's a link:

http://www.amazon.com/exec/obidos/AS...&link_code=as1

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

The Chartered Life Underwriter (CLU) and Chartered Financial Consultant
(ChFC), designations owned and exclusively offered by The American College,
signify the highest standards of academic study and professional excellence
in the financial services industry.

- quote -

I think we gave vague advice, or even less- vague opinions, or even
vague ideas, because we did not know much about the OP's friend.

"_JP" <jung_h_park[at]y.a.h.o.o.com> writes:
- quote -

Be careful tossing around expressions like "money market *or*
mutual fund".

'Money market' could mean either money market accounts at a
bank or money market mutual funds.

'mutual fund' could mean anything in the risk spectrum from
a safe money market fund all the way to very very risky
undiversified sector fund. It's a very broad term and by
itself says nothing, really, about either the risks one is
taking with that money or, in fact, what asset class that
money's invested in (there are REIT funds, bond funds, equity
funds, etc).


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<BreadWithSpam[at]fractious.net> wrote in message
news:yobu0xsppg8.fsf[at]panix2.panix.com...
- quote -

Okay, I'm back.

Thank you all for your input. I agree I didn't provide enough information
for any kind of "daring" advice. Well, unfortunately that was all I know.

I guess money market or mutual fund is the way to go for him, depending on
when he wants to use the money.

Ignoramus23878 <ignoramus23878[at]NOSPAM.23878.invalid> writes:

- quote -

The OP's friend has more than that $5k, too. It's not obvious
whether he has any emergency fund set up, but, from the original
post:

He's 32 years old, married with two children, 2 and 1 year old.
He doesn't really have any debt nor installment to pay; all his
living expenses are taken care of by government (it must be good
to be him , and all he has to pay is his car, which is paid up,
and the phone bill, which is quite inexpensive over where he
lives. He has TSP funded by government, and beside that, he has
started putting the max into his IRA from 3 years ago.

Presumably, his TSP and IRA are loaded with non-cash-equivalent
invetments. He's also got a house.

Frankly, none of us really has enough information to offer
him great investment advice. At best, we're in a position
of "do no harm" - which means, to me, until we know more
about his situation, that $5k should be in some cash
equivalent.

The guy's apparently a Marine, stationed in Japan, and most
of his day-to-day expenses are completely covered by the
military.

That all said, if he's got no emergency cash, he needs some.
This $5k was just sitting around in his checking account,
which, given current interest rates, isn't all that much
worse than sticking it in a savings account or the money
market.

Note, too, that the original poster has not shown up here
since posting that original message.



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In article <dcline-89DB5E.07505503062004[at]news.silcom.com> , Richard Cline wrote:
- quote -

those experts may have a little bit more than $5k saved... just a
thought...

How many experts here have less than $5k in money market or other safe
short term investments?

i

In article <DrFvc.25750$_k3.662438[at]bgtnsc05-news.ops.worldnet.att.net> ,
"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote:

I wonder how many of the experts in this thread have put 100% of their
investments in money market funds.

Dick

- quote -

- quote -

I am simply astounded at the advice given in this thread. This fellow has
this money sitting around because he doesn't need it and doesn't know what
to do with it. Why on earth would anyone suggest he continue to do just that
by putting it in a money market fund? He should find a vehicle to save for
his children's education. If not one of the tax favored vehicles, then at
least an UGMA or even a mutual fund in his own name. Invest for the
mid-term in a balanced fund, maybe even a large cap growth fund. He may also
need to save and invest more in order to supplement his military retirement,
which will unlikely be sufficient to satisfy his entire retirement needs.
Military retirements are nice, but they are not 100% of pre-retirement
income.

Elizabeth Richardson

pmb[at]his.com (Paul Michael Brown) writes:

- quote -

or a money market fund (making a little more interest) or something
like an ING Direct Orange savings account, which currently earns 2%.

Or even savingsbonds - but only if he's certain he won't need
the money for a full year. After a year, they are redeemable,
though with a small penalty.



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pmb[at]his.com (Paul Michael Brown) wrote in message news:<pmb-0206040908310001[at]max2ka-180.his.com> ...
- quote -

If he wants money in 10-15 years, putting money in a retirement
account is not what I suggest.

If he wants money for retirement purposes only, then a retirment
account is an option to consider.

I assume a TSP is similar to an IRA/ 401k?

- quote -

I concur in this advice. Our Marine should open an account with the Navy
Federal Credit Union and sock the money away for a rainy day. If he thinks
he'll need the cash in the next year or two, he should put it in a boring
but totally safe checking account. If his time horizon is longer, he
should consider a certificate of deposit. It never hurts to have six
months of living expenses in a safe place where you can tap into the funds
in an emergency.

- quote -

This is also good advice -- PROVIDED the the money is not needed for an
emergency fund. But instead of investing in a taxable account, our Marine
should utilize the federal government's Thrift Savings Plan (TSP). Not
only will he get all the usual tax advantages, but he'll be able to invest
in five different funds that charge a paltry 10 basis points per year in
fees. The original poster might recommend that our Marine make the maximum
possible TSP contribution -- using the $5,000 as needed to supplement his
take home pay. This would result in "transferring" the money "into" the
TSP.

"_JP" <jung_h_park[at]y.a.h.o.o.com> wrote in message news:<-6idnellIuBMgCHd4p2dnA[at]comcast.com> ...
- quote -

I think it depends on how long the money will not be needed and your
friend's tolerance for risk.

Money market would probably yield better than a checking or savings
account. If money sits there for just 7 years, it will lose
purchasing power because of inflation, probably.

However if he wants the principle returned intact in 5 years, the
savings account sounds like a good choice, as does the money market,
as does other investment tools, like CDs, TIPS or short term bonds.
Ultra short...

If money can sit there for 10-15 years, then investing in wilshire
5000 index, S&P 500 index, or another mutual fund is worth
considering. With $5000 as a one time investment I would consider
purchasing up to 3 funds.

If he has the capability to add into the funds (even adding just
$50/month), I might consider purchasing 4 or 5 different funds and
creating a portfolio of mutual funds which include large cap, small
cap, international and money market funds.

In article <-6idnellIuBMgCHd4p2dnA[at]comcast.com> , _JP
<jung_h_park[at]y.a.h.o.o.com> wrote:

- quote -

I would suggest opening a brokerage account at a discount broker.
Put $1K into a money market fund, and $4K buying one of the exchange
traded funds, such as VIPERs. A viper is an extremely low cost
index fund that trades like a stock. You want a broker that can
do this trade for somelike $8 so you don't get eaten alive by fees.

-john-

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