Jewish World Review Oct. 22, 1999 /12 Mar-Cheshvan, 5760
Online fine, but CDs?
DEAR BRUCE: We are considering investing in a CD through online banking. How do we know the bank is as it says? It is one that we are not familiar with. -- L.F., via e-mail
DEAR L.F.: Contact the online bank and ask for their banking number and the authentication that the FDIC insures them with. Online banking is becoming a bigger presence, and I am sure that it will get much bigger still. I am wondering, though, why you would want to buy a CD -- it gives you such a poor return and is also taxable. If you are considering investing for a long period of time, I would go into a 30-year long-bond, which will kick off about as much or maybe a little more with no tax consequence on the federal level.
DEAR BRUCE: I nearly always agree with you and enjoy the information I find in your column, but I can't agree with your suggestion to buy municipal bonds for an IRA. There is no reason to accept the tax-free rate when the IRA distribution will be taxed at regular income tax rates. Did I misunderstand? -- R.V., via e-mail
DEAR R.V.: For the very reason you mentioned, I don't believe I ever suggested that under ordinary circumstances municipal bonds belong inside an IRA. The only reason I can think of to do this is if the individual transferred risk of any kind. Given this, and if the individual is in a high income bracket, this course might be advisable, but it would be very, very unusual.
DEAR BRUCE: You have helped me through many rough times. I am 15 years old and will soon will be turning 16. I have a big, big question: I have always wanted a Jaguar. My Dad found me a 1987 Jaguar with 72,000 miles on it, and the asking price is $8500. The body has no rust and the paint is in fantastic condition. Do you think this is a wise choice? -- M.H., via e-mail
DEAR M.H.: I hate to rain on your parade, but the last thing I think a 16-year-old needs is a Jaguar of any kind. You are a beginning driver, and a Jaguar is a high-performance automobile. I would be very, very uncomfortable if one of my kids was driving one at 16.
Also, if you talk to almost anybody who has owned one of these high-performance cars, you will find that the maintenance costs can be very expensive. If I were your Dad, I would suggest that you get an older car in good condition -- probably a bigger car, which would give you some protection until you have some experience on the road. You have a whole lifetime to drive a high-performance automobile. You sound like you have a good head on your shoulders, and I wish you well -- but I also hope you listen to what I have to
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).
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