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Old 10-12-2008, 06:42 AM   #21
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Originally Posted by mathjak107 View Post
I Wonder how her TIPS are doing that she recommended so highly. phew they got hit as hard as stocks this week if you hold them short term, and market thinking is you will get killed in lost interest if inflation climbs as new bonds are issued at far higher rates. if your not getting those higher rates your loosing then regardless if your bonds are fixed at par or not.

people think because they buy individual bonds and get par they arent loosing. but holding 3% bonds in a 6% world is a loss...... no matter how you want to fool yourself if a money market is at 6% for a period of time and you get 3% on a bond you are loosing 3% for that time frame
The effective return may drop or rise against "current" interest rates but the value of an individual bond/CD is that the principle will be returned at some defined point in the future (not including default risk - a whole other subject). Yes, if you had waited until interest rates went up, you'd have a higher income from your bond. However, interest rates could drop and then you'd have less income because you waited.
Also, don't forget you're paying a management fee on the mutual fund. I can't see any reason to do that when a better return is available in individual bonds. Of course, there are some closed end bond funds selling at outrageous discounts right now. My old self would be loading up on these.

Laddering individual bonds/CDs allows forces you to reinvest at the current interest rates or spend the money. Buying bond mutual funds may increase or decrease in value depending on the current interest rate. If you happened to buy a bond mutual fund when interest rates were 15%, you're sitting pretty. If you loaded up on a TIPS fund when they were at 0%, you'll be a sad puppy if there isn't any inflation. If you are liquidating a bond mutual fund for living expenses, you may be taking capital losses or gains.

Laddering becomes a way of spreading interest rate risk over a long time period. You will participate in the whole interest rate cycle but the principle will come as the bond/CD matures.

I'm lamenting the maturity of my 5 1/2% CD because I'll have to reinvest at 4%. I may lament the maturity of this one because I'll only have 3% available when I reinvest but I might have 6% available instead.

Also, you pay a management fee for a bond mutual fund. I don't see why I should lower my return when individual bonds/CDs are so easy and cheap to buy. There are some outrageous discounts on closed end bond funds. My old self would be all over these but I keep coming back to the reason I buy CDs. I absolutely positively want to know that I'll have my principle available on a certain date. It's the hyper conservative part of my AA.
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Old 10-12-2008, 07:49 AM   #22
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She can be over the top. Hey its TV. She is supposed to be entertaining too. I do think some of her advice sucks. But I think she is spot on about debt.
She's subdued compared to Jim Cramer. Can't take five seconds of his show. Can't blame Suze and Dave Ramsey for doing what they do. Americans need to be scolded about LBYM.
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Old 10-12-2008, 07:50 AM   #23
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I like Suze.
So do I.
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Old 10-12-2008, 08:07 AM   #24
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I consider Orman to be a first and second grade teacher for personal finance... She teaches the ABCs...

On the investment front, I would not recommend that any new investor take advice from her except commonly known investment wisdom... For example: one needs to diversify with a common example of it. I would not follow any investment advice she would offer. Hopefully she is not offering investment advice.
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Old 10-12-2008, 08:10 AM   #25
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I flipped through the channels the other night, Suze was on Larry King. Lecturing everyone. Everyone is in debt according to Suze! Larry brought up..."but if you're not in debt, this crisis isn't going to hurt you?"

Then Suze, annoying as ever..."Larry, everyone is in debt!"

Everyone watching Larry King is in debt! That's a new one.
If she's including our share of the government's debt, she's right.
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Old 10-12-2008, 09:01 AM   #26
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I think she is mildly entertaining but sometimes she is way off the mark in that can you afford it . Last night a guy asked if he & his wife could go on a $41,000 ,64 day cruise . He was 59 had a pension of 8K a month , a 38,000 mortgage , leased a car and had only $44,000 in savings and she said "Yes he could afford it " . Sorry girlfriend but you are wrong ! He has no back up for emergency savings especially being 59 . Plus you forgot to even ask him what survivor benefits were connected with his pension . He would have been better saving the money and watching the travel channel.
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Old 10-12-2008, 09:33 AM   #27
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I consider Orman to be a first and second grade teacher for personal finance... She teaches the ABCs...
I agree, and I think that's a good thing (not implying that you don't). I know a good number of people who are financially still in kindergarten. She stresses LBYM and getting out of debt, and quite frankly I don't think we as a society can be told that enough.
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Old 10-12-2008, 11:52 AM   #28
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I consider Orman to be a first and second grade teacher for personal finance... She teaches the ABCs...

On the investment front, I would not recommend that any new investor take advice from her except commonly known investment wisdom... For example: one needs to diversify with a common example of it. I would not follow any investment advice she would offer. Hopefully she is not offering investment advice.
Very superficial advice. Not specifics like Cramer. She's like the Dr Laura of financial advice - mostly talking about money, relationships, etc. Still she has a large following - and the fact that she's encouraging people to invest for the long term and to LBYM is pretty significant w/ today's entitlement generation.
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Old 10-12-2008, 12:42 PM   #29
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I think she is mildly entertaining but sometimes she is way off the mark in that can you afford it . Last night a guy asked if he & his wife could go on a $41,000 ,64 day cruise . He was 59 had a pension of 8K a month , a 38,000 mortgage , leased a car and had only $44,000 in savings and she said "Yes he could afford it " . Sorry girlfriend but you are wrong ! He has no back up for emergency savings especially being 59 . Plus you forgot to even ask him what survivor benefits were connected with his pension . He would have been better saving the money and watching the travel channel.

Exactly! I was surprised by this because in the past when some wife was asking for advice about her husband wanting to "spend big money" while they had little savings or backup, Suze has emphasized that the wife was right to be uncomfortable and that the couple needs to have life insurance and pension survivor benefits and the wife needs to have her own retirement savings, etc. etc.

I don't think she asked him about his medical insurance situation which would be important since he was 59, too young for Medicare. I guess she can't do a full analysis on TV but I think that question should have been asked.

Suze is very erratic in her advice, doesn't look at the total picture very often, and although I appreciate the "get out of debt" message she is emphasizing now, she does people no favor to tell them they can afford a $22000 cruise with only $44,000 in emergency savings.
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Old 10-12-2008, 06:40 PM   #30
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If she's including our share of the government's debt, she's right.
I think Larry asked about personal debt, like credit cards. Suze was going on about....how access to credit is going to be harder because of the crisis.

Then Larry pointed out....but if you're not in debt, it won't hurt you.

"Larry....everyone is in debt".

I guess I have debt I don't know about!

I could understand it if she was talking about insurance, or something that everyone did have. But when her persona or message is threatened, it gets so absurd. Like Cramer, he's built himself up so much, he always has to be talking about stocks.
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Old 10-12-2008, 08:54 PM   #31
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I think Larry asked about personal debt, like credit cards. Suze was going on about....how access to credit is going to be harder because of the crisis.

Then Larry pointed out....but if you're not in debt, it won't hurt you.

"Larry....everyone is in debt".

I guess I have debt I don't know about!

I could understand it if she was talking about insurance, or something that everyone did have. But when her persona or message is threatened, it gets so absurd. Like Cramer, he's built himself up so much, he always has to be talking about stocks.
So absurd that a former waitress has $50,000,000 in municipal bonds.

Now that is the kind of absurdity I want to be part of.

Ha
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Old 10-12-2008, 08:59 PM   #32
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So absurd that a former waitress has $50,000,000 in municipal bonds.

Now that is the kind of absurdity I want to be part of.

Ha
I guess she wasn't waiting tables for the people in the other thread that don't like to tip.
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Old 10-13-2008, 05:31 AM   #33
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Originally Posted by Moemg View Post
I think she is mildly entertaining but sometimes she is way off the mark in that can you afford it . Last night a guy asked if he & his wife could go on a $41,000 ,64 day cruise . He was 59 had a pension of 8K a month , a 38,000 mortgage , leased a car and had only $44,000 in savings and she said "Yes he could afford it " . Sorry girlfriend but you are wrong ! He has no back up for emergency savings especially being 59 . Plus you forgot to even ask him what survivor benefits were connected with his pension . He would have been better saving the money and watching the travel channel.

I watched a few minute of her can you afford it segment. When she approved the silly 64 day cruise, I got disgusted and switched channels. Beside a lack of emergency savings, the other really important thing she did not ask is where his pension from. Federal Govt fine? State or local Govt probably ok? Corporation a pension from IBM or Johnson & Johnson is heck of a lot more secure than pension from GM, Ford, a Bank, an airline.
The pension guarantee corp routinely slashes big 8K/month pensions if they take them over.
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Old 10-13-2008, 08:07 AM   #34
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The pension guarantee corp routinely slashes big 8K/month pensions if they take them over.
Based on how we've configured our own lives, they could cut a $96K annual pension in half and we'd still be okay. And we wouldn't be too freaked about what our 401K was doing.

It's pretty damn hard for me to feel any sympathy to anyone who can't find rock-solid financial security when they have a pension paying nearly $100,000 a year. If they can't survive the gold-plated retirement they've been blessed with, that's their problem.
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Old 10-13-2008, 08:30 AM   #35
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I praise her for pushing zero debt and being responsible for your finances. It's a shame that we need people like her to explain the obvious. Jim C. and Fast Money are just fun to watch. I notice that they say to buy something, except index funds, and never mention how those recommendations are performing - if they were really amazing they would of told everyone to be in cash 6 months ago!

It's all entertainment - no substitute for reading quality books on the subject.
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Old 10-13-2008, 08:36 AM   #36
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I think folks like Orman and Ramsey have audiences that tend toward the "lowest common denominator" of personal finance. I disagree strongly with Ramsey, for example, that debt can't be used responsibly. But on the other hand, a lot of people who do get into trouble with debt assumed they'd be one of those responsible users. So in reality, it's probably easier -- given their primary audience -- to just say no, with the likely exception of a mortgage.

I think the question is, how much of the recent trend toward "frugal living" and "living within the means" will stick with people once they see the light at the end of the tunnel.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 10-13-2008, 12:13 PM   #37
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I think folks like Orman and Ramsey have audiences that tend toward the "lowest common denominator" of personal finance. I disagree strongly with Ramsey, for example, that debt can't be used responsibly. But on the other hand, a lot of people who do get into trouble with debt assumed they'd be one of those responsible users. So in reality, it's probably easier -- given their primary audience -- to just say no, with the likely exception of a mortgage.
Agreed, and it never hurts to pay off debt. But DR's extreme dogmatism and simplistic approaches to things really drive me nuts. And he's clearly dismissive of (and hostile to) the idea of ER.

The one place where I think he really does harm is when he suggests to people that they can consistently get 12% on investments, that they should basically always be 100% invested in equities (he derides bonds and CDs for everyone), and that they can plan a WR of 8% from their portfolio in retirement or for a widow's life insurance proceeds. Those are clearly not good assumptions.

It's rather ironic that he stays so conservative with regard to debt (reduce risk by having no debt) and yet is very aggressive with regard to investing. I think he's a bit disconnected from reality regarding investing because he's amassed a comfortable fortune himself. I'm not sure why else he'd have this inconsistency in his approaches.

He should stick to debt reduction and stay away from investing advice!

As for Suze, I just can't stand her voice and mannerisms. She grates on me so I can't take more than a small dose on rare occasion. Much better things to do with my time.
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