Money Matters With Jon Delano

Is Another Stimulus Check Coming For Taxpayers?

QUESTION:  Is the government going to issue another stimulus check any time soon? I keep hearing sometime later this year. -- Charles

ANSWER:  With the economy in a recession and lots of worries about 2009, many people are asking the same question, Charles. But there will be no further stimulus checks in 2009. Congress is set to adjourn until the 111th Congress convenes in January. Now at that time, especially after the inauguration of President-elect Obama, both the new president and Congress are expected to offer new proposals to stimulate the economy. When I interviewed House Speaker Nancy Pelosi earlier this fall, she was cool to the idea of another stimulus check for taxpayers. Many economists think the last check program did not really do much to spur the economy because taxpayers did not spend the money, opting instead to pay off debts. The best bet is that the 2009 stimulus program will cut certain taxes to spur spending and pump money into jobs, highway, and infrastructure projects. After that, the politicians might find some money to send directly to you, the taxpayer!

Is The $250,000 FDIC Insurance Limit On Bank Accounts Temporary Or Permanent?

QUESTION: Is the $250,000 FDIC insurance limit on bank accounts temporary or permanent? I have heard both words used recently. -- James

ANSWER: When Congress increased the amount of money insured by the Federal Deposit Insurance Corporation at participating FDIC banks, it did so on a temporary basis. The insured amount was increased from $100,000 to $250,000, but that higher limit expires on December 31, 2009. What does the insurance cover? Here's what the FDIC says on its website: "FDIC insurance covers funds in deposit accounts, including checking and savings accounts, money market deposit accounts and certificates of deposit (CDs). FDIC insurance does not, however, cover other financial products and services that insured banks may offer, such as stocks, bonds, mutual fund shares, life insurance policies, annuities or municipal securities." But effective January 1, 2010, the insured amount will drop back down to $100,000, except for certain IRAs and retirement accounts. Of course, Congress can always vote sometime next year to extend the quarter million dollar insurance.

Do I Really Need To Worry About The Stock Market?

QUESTION:  I don't have a 401K. I don't invest in stocks, and I have less than $100,000 in our FDIC insured banks. Do I really need to worry about how the Stock Market is fluctuating like it is? I understand how the market is has an indirect affect on prices of various things going up and down, but other than that what should I have to be worried about? -- Dale

ANSWER:  This is an interesting question, Dale, and certainly the answer depends on how far your worries stretch. In the short run, you seem to be doing just find with your own money, since none of it is invested in the volatile stock market. Of course, you won't make much money either, since Wall Street offers the best rate of returns for the gutsy. Beyond your own situation, however, is a world of hurt that afflicts not only your friends, neighbors, and relatives, but also threatens the global economy. Most of those who lived through the Great Depression of the 1930s didn't have money in the stock market either, but they paid a very high price in unemployment, as one company after another failed. For better or worse, the stock market often reflects public attitudes. Right now, 82% of Americans say we are on the wrong track, and many of us are retrenching, scaling back, and stretching our resources. That inevitably leads to job lay-offs and loss of income. In 2008, things are certainly not as bad as the 1930s, but we all will pay a price somewhere along the line if the next President and Congress can't get things turned around.

Do I Need To Move Some Of My Mother's Money?

QUESTION:  I have a question about bank accounts and FDIC insurance. I have heard conflicting things and am concerned. My Mom and I are joint custodians on a checking account, a money market account, and three CD's at National City Bank. Together they total about $260,000.00. Do I need to move some of this money to another bank or are we ok? My Mom is a widow and I want to make sure I do the right thing for her. -- Debbie

ANSWER:  You are a good daughter to watch after your mother's finances, Debbie. First, it is true that PNC is acquiring National City Bank, but that should not jeopardize any of your accounts at that bank. In fact, it ought to strengthen the bank. Second, the FDIC now insures accounts up to $250,000, and that would cover your joint checking account and three certificates of deposit. A money market deposit account is also insured by FDIC, but a money market mutual funds are not. Third, splitting up your savings among several banks is a personal decision. Assuming an equal rate of return, most people like the convenience of a neighborhood bank with consumer-friendly personnel. But spreading your wealth among banks makes perfect sense in these uncertain times, as long as you're pleased with the banks' service and confident of their long-term security.

Why Do Investors Always React To 'Big News' ?

QUESTION:  This is a question I have often pondered, and at this time of financial crisis it seems appropriate to ask it out loud: What would happen if investors continued to trade normally, even in the face of "big news"? It seems to me that a big part of the problem is that investors react immediately and dramatically to every bit of news, both bad and good -- hence the wild swings on Wall Street. If investors would not make such hasty moves, wouldn't that help stabilize the economy?
-- Barbara

ANSWER:  This is such a common sense question, Barbara, but I'm afraid I cannot offer much other than my own opinion. I think you are right. Investors do react to "big news," particularly big "bad" news. But that's not surprising, since the market tries to anticipate the public reaction, especially to economic stories, and that often requires selling certain kinds of stock. Telling investors not to react to news is like asking the sun to not rise in the morning. It just won't happen. But I do wish that Wall Street investors -- especially the institutional ones that manage so much of our mutual funds -- would just pause a moment before following the herd. Ah, well, the sun will come up tomorrow!

Where Can I Put Money Money So I Can Get A Return On My Investment?

QUESTION: I am soon to receive a settlement in the amount of $10,000. Where would you suggest that I put this money so that it may bring some returns. I absolutely do not want to put it anywhere that I could possible lose any of it. --Maureen

ANSWER:  This question, Maureen, is both simple and complex. Obviously, if you do not want to risk any of the money you are about to receive, then just bank it. You cannot lose money in a traditional savings account that is insured by the Federal Deposit Insurance Corporation. And a savings account is safer than hiding your money under the mattress. But money that doesn't make money actually loses value over time because of inflation. A dollar today will almost certainly be worth less a year from now. Most people want to make money off their savings, or at least keep their money from losing value, and that's where life gets complex. Besides an interest-bearing savings account, you might consider a certificate of deposit (CD), or a money market fund, or Treasury bonds, or any financial instrument where the principal value -- in your case, $10,000, is guaranteed -- but you can make some interest on top as well. A financial planner may be worth the investment, too, especially in a situation like this. Good luck!

Should I Roll-Over My Profit Sharing Money?

QUESTION: I have $85,000 in a profit sharing program at the company I work for. I have no say as to what it is invested in. I am 61 years old and plan on retiring at the age of 66. Should I remove my money now, or should I leave it where it is? Also If I do remove it what is the safest rollover for me to invest in. -- Betty

ANSWER: A profit sharing plan is a wonderful way for a company to retain quality employees by essentially sharing the profits the company has made. Generally, the company distributes dollars into an employee's account which, after it vests, becomes the employee's money, even though the employee never made any contribution into the plan. The company has full discretion on how that money is invested and often has rules on removing the money. I cannot comment on your company's profit sharing plan because I don't know the company or the plan. Generally, if you withdraw money before age 59-1/2, you will pay a ten percent penalty. But since you are 61, this is not an issue for you. If you are concerned about the long-term value of the $85,000, I would consult with your company's human resources official. If it's allowable, and you're worried about the plan losing value, you certainly could roll it over into a bond fund or some other stable fund.

Who Sells US Treasury Bonds?

QUESTION: Who sells the U.S. Treasury Bonds and if multiple places, where is the best and/or most convenient place? -- Nancy

ANSWER: U.S. Treasury Bonds are always a popular investment because they retain value, unlike stocks or equities that can plummet in worth, and the fixed interest earned on Treasury bonds is exempt from state and local taxes, although still subject to federal tax.  Treasury bonds are issued by the U.S. government as a way to raise money to pay for government projects, military wars, or any other expense, and they are backed by the "full faith and credit" of the U.S. government, which means they are very safe investments -- even if they do not pay high rates of return. The term of the bond is usually 10 to 30 years and requires a $1,000 minimum purchase. The government sells bonds directly to individuals (check out http://www.treasurydirect.gov/indiv/products/products.htm), or you can buy them from a broker or bank, although you will probably pay a fee. Whatever is the most convenient way to purchase Treasury bonds is a matter of opinion, but with the roller coaster ride on Wall Street bonds are increasingly popular.