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Show The Salt Lake Tribune BUSINESS Sunday, September15, 1996 ee SAVINGS GAME HUMBERTO CRUZ sent me a form which showed a taxable income amount. One of they don't charge any upfront fees to invest or “surrender charges” when you take your money out. The companies and their toll- them was darnedsteep. A: More than a dozen of you wrote to say the same thing, al- Berger, 1-800-333-1001; Founders, 1-800-525-2440; T. cies I owned for a number of years. Each insurance company I came back from vacation recently to a big stack of mail, most of it commenting or inquiring about ever-popular topics. I suspect I've addressed all of them at somepoint, but a refresher never hurts. Q: My wife and I have credit card debt of $3,700 with an interest rate of 18.65 percent. The minimum payment is 2 percent and we have been paying $100 a month. We have four savings accounts earning 4 percent and we eer a total of $55 into them @very week. We are also buying U.S. savings bonds with $10 a week. My question is, should we pay off the credit card as fast as possible by adding those $55 we aré putting into savings? Yes, yes, yes and yes, for of your savings accounts. And while you're at it, drop the gaVings bonds andusethe $10 to also pay off your credit-card debt Ifyou keep making 4 percent while you are getting charged 18.65 percent you are losing 14.65 percent on your “savings.” ~Now I have a question for you: Why do you keep four separate sBvings accounts? If you put ev- free numbersare: thoughnotascolorfully. But all of Rowe Price, 1-800-638-5660; you are confusing tax penalties with the simple tax you must pay when you make a profit Strong, 1-800-368-1030, and Twentieth Century, 1-800-3452021. Q: I am single, earn $50,000 a you owe income tax if the amount you withdraw is more than the to- year and have $10,000 in capital With cash-value life insurance, Pay Off Cards Before Putting Into Savings eh cashed in two life insurance poli- tal premiumsyou paid. With oth- er tax-deferred plans, such asin- gains. Most of my investments are in mutual funds that are doing very well. But I have absolutely dividual retirement accounts and no writeoffs. 401(k)s, you also owe the regular tax plus usually a 10 percent penalty if you take the moneyout before age 59%. My $120,000 home is paid for. Should I purchase a bigger one just to have a mortgage writeoff? Q: Your investment advice is very interesting, sir, but it seems to make sense onlyfor the people in a position to take advantageof it. A. A week doesn’t go by that I don’t get a letter clinging to the myth that it takes a lot of money to invest. It actually takes far less than what a lot of Americans waste in credit-card interest each month. Either mutual funds or stock dividend reinvestment plans re- quire only modest amounts. For small investors who are just getting started, mutual funds offer Ihave heard aboutvariable annuities but can’t quite grasp the concept. I don’t need life insurance so why would I wantan annuity? A: The idea of getting a bigger mortgageis absurd. So is spending on things you don’t need just to get a writeoff, becauseat best a tax deduction saves you only a fraction of every dollar you spend to getit. In your case, it would be 28 cents because, based on what you makewith no writeoffs but at least one personal exemption and The good news: Many mutual fund companies waive their usual minimums if you commit to in- the capital gains yourself by sell- ownsomeofthe nation’s best mutual funds,” said Mari Adam, president of the South Florida Society of Certified Financial Plan- ners. no choice but to report on your tax return, or did you generate if you have anyto offset any gains. Second,invest in funds that don’t make a lot of taxable distributions. Usually they are those that paylittle or no dividends and that grows, Adam suggests, you can stick with your original fund, switch to a second fund or divide tal-gain distributions that are tax- + Q: You said that unlike money ip most other tax-sheltered in- your money amongseveral funds. penalties at any age. with as little as $50 a month. They are all no-load funds, meaning Youradvice is pure bull-oney. I nally take the money out, the “in- surance” also guarantees you a monthly incomefor life, if that’s your choice. I find this “insurance” to be a total waste. But all investors in variable annuities pay for it, not directly by check but through “mortality charges” that lower the investment return. I am not complaining, though. It’s precisely because of the insurance ele- ment, however thin, that annuities qualify for tax deferral under our crazy tax code. If you hold an annuity long enough, the savings from deferring taxes will likely outweigh the insurance costs. Humberto Cruz lives in Coral Springs, Fla. Write him c/o Tribune Media Services, 435 N. Michigan Ave., Suite 1400, Chicago, IL 60611. Send e-mail messages to: HCr THE ASSOCIATED PRESS market in 1961 “We were driving up to CINCINNATI — Thirtyfive years ago, Vic Mills decid- Maine,” Mills said. “I put her onthe tailgate of our station ed to try to find a way to avoid the mess of his granddaughter's cloth diapers. The chemical engineer from Procter & Gamble Co. came wagon and changed her.” At first, disposable diapers were considered so unique they were used mainly for travel, by baby sitters and on special occasions. Today, 81 percentof the hospitals in the United States use disposable up with Pampers, the first mass-marketed disposable diaper that helped createa billion-dollar industry. P&G celebrated Pampers’ 35th anniversary this month. diapers, and 94 percentofall “Pampers has becomea tradition in parenting,” said P&G Vice President Jeff Ansell. Mills, now 99, long-retired and living in Tucson, Ariz., worked for Cincinnati-based P&G for 35 years. He helped to develop such products as Jif peanut butter, Duncan Hines cake mixes and Pringles chips. But nonestood out as much as Pampers, which he tested on his newborn granddaughter before the diapers hit the parents rely solely on disposable diapers. The company is trying to win back market share from rival Kimberly-Clark Corp., which holds market leadership in the United States with its Huggies brand Huggies has about 40 percent of the $3.6 billion U.S. market for disposable diapers and training pants, according to estimates. Pampers’ annual sales of $928 million amount to a 26 percent share. Jaol.com. Money Market Account Youcan do twothings to lower fore yourtaxes.First, hold on to your shares, or sell a few “‘losers” erything into one with a higher vestments, life insurance cash values-can be withdrawn without tax in, no matter how badly your investments do. And when youfi- Pampers Celebrates 35th Anniversary Annual Percentage Yield” your capital gains — and there- don’t trade their portfolio too Here are some mutual fund companies suggested by Adam that allow you to open an account Theonly “insurance” in a variable annuity is that your beneficiary will get at least what you put ing shares of your funds? As the size of your account balance you might even earn a higherinterestrate. companies. 1 am curious as to how youfig- ure the $10,000in capital gains.Is that money that the mutual funds distributed to you, and you have month by having the money electronically transferred to the fund from your bank account. “With only $50 a month you can annuities are sold by insurance the standard deduction, you are in the 28 percenttax bracket. morediversification than individual stocks. vesting just a few dollars each insurance even though variable much so they don’t generate capiable to you. Next, think of a variable annuity as simply a vehicle through which you can buy mutual funds and defer paying taxes on any earnings until you withdraw the money. Do notthink of themas $1 to $2,499.99 $2,500 to $9,999.99 $10,000 to $24,999.99 $25,000 to $49,999.99 $50,000 + Earn higherrates without locking your moneyup in 9 certificate. All Cyprus accounts are insured by the National Credit Union Administration 4.06% 4.31% 4.56% 4.81% Greatrates are alsoavailable oncertificates of deposit for members who want evenhigherrates for 6, 12, 18, 24, 36, 48 or 60 months. Don’t miss this opportunity. Call today: 250-5858. (CB Cyprus Credit Union Membership opentoresidents ofSalt Lake, Davis, Utah and Tooele Counties. ve 8/276, rates subject to change 4 ds i+: pare pauey pealtaliog You gotta love it, baby! Target the sports rene oaeat SeMaa SUNAUEPATCOROCaeOnan hhTe ewer eresa Sunday, October. 27 bs How’ boutthatJazz! Utah’s own Jazz are gearing up for another great season of basketball. Join the preseason excitement with an ad in the * Utah Jazz Season Opener,a special section tailored to the sports fan in all of us. Your message will reach 435,200 adult readers of The Salt Lake Tribuneor Deseret News. Featuring a roster of players and coaches, lots of good Jazz stats, a A Special Section Publishing - season calendar,thelatest additions to the team and othertopics Jazz : fans find most important, the Utah Jazz Season C yenerwill be a slam Monday, October 14 . dunk with your customers and show them your support for Utah's in The Salt Lake Tribune and Deseret News team.Spaceis limited,so call now and join the fun! For more information, contact your account executive or call 237-2815 Advertising Space Reservation in conjunction with the American Cancer Society benefit “100 Years of Utah's Greatest Sports Memories” on October 21 at Abravanel Hall, The Salt Lake Tribune and Deseret News will publish a special section celebrating Utah's sports history and legends. Your message will reach 357,800 adults in the Salt Lake area,rightin the middie of thefall football frenzy! The ad space reservation deadline is Monday, October 7, so don't delay! For more information, contact your account executive or call 237-2815. Deadline Is Friday, October 4 The Salt Lake Tribune X* Deseret News TheSaltLakeTribune& Deseret News POOR Copy | |
