Who Needs a Financial Education? All of Us!

Financial advisor Darrell J. Canby is not alone when he insists that today’s children need a financial education. The fact is we all do.

A lack of financial common sense led to the current financial crisis, Canby observes. “People bought homes they couldn’t afford, banks abandoned sound lending standards, politicians passed laws that encouraged financial recklessness and regulators failed to regulate,” he says.

A billion dollars used to seem like a lot of money. Now a trillion is the new billion, and our children will be left with a mountain of debt and all of the problems we haven’t solved. The least we can do is to provide them with the financial knowledge to do better.

What are the most valuable lessons to be learned?

Learn more about how to manage your finances

Credit Cards Come Under Gov’t Scrutiny

In a showdown between the federal government and credit card issuers, president Barack Obama meets with executives from 14 credit card issuers today, including American Express, Bank of America, Capital One Financial, Citigroup, Discover Financial Services, and JPMorgan Chase, to discuss concerns over practices such as raising interest rates on existing credit card balances.

A congressional panel was expected to approve a bill mid-week that would curb high credit card fees and penalties imposed by many banks that have benefited from the federal government’s financial bail-out program. The proposals are similar to sweeping rules adopted by US federal regulators in December. These rules take effect in July 2010, but the bill’s approval would accelerate their implementation, forcing the country’s banking industry to forgo billions of dollars of annual interest payments sooner. The pro-consumer bill is an important test of the political will of Democrats who are pushing for US financial regulation reform.

What’s your view on credit card policies? Should there be strict new disclosure standards for credit card lenders? Should pricing practices that expose borrowers to unforeseen costs be prohibited?

2009 Insurance Rate Wars, Time to Shop is Now!

A new batch of numbers, released at the top of the year and stating that people are living longer than ever before, has prompted Life Insurance companies to lower their rates in many cases. If you have a life insurance policy purchased prior to 1/1/2009 you may be paying too much. Some of the largest savings are being seen in Term Life Insurance policies between $500,000 and $1 million.

Compared to 20 years ago, term insurance rates remain extremely low. Increased competition between carriers on the Web, improved mortality rates and better underwriting has driven the cost down by 75% since 1990. For instance, a 20-year term policy providing $500,000 in coverage would have cost a 40-year-old, non-smoking male in 1990 about $1,400 a year. Now, the same policy may cost around $400.

Term insurance is particularly attractive now, when the tough economy is forcing consumers to look for ways to cut costs. These policies are renowned as being smart for younger individuals or families who need insurance for a certain time period, say while they have dependent children.

The industry may be facing a reversal of term insurance rates with increases to come. Before companies raise rates, consumers can take advantage of the market opportunity…if they act quickly.  When was the last time you compared the cost of your life insurance policy or shopped for a better price?

A Taxing Decision: What to Do with Your Refund

The tax refund splurges of years past are not a reality for most Americans in 2009. Many people are likely wringing their hands over what to do with the money they receive back from Uncle Sam. Their concerns are well-founded: It’s more important than ever to consider the right options for your refund.

It’s also the right time for refund recipients to consider meeting with a financial professional who can help establish financial priorities and goals.

If you have outstanding bills or debts, take care of those matters first. But if you find you have money left over from your tax refund or have the full amount, don’t be scared of your options — be smart in your decisions.

Consider these options to put your tax refund to work for you…

Read about ways to invest your refund

Art Prices Fall 35%, Collectors Paint Less Rosy Portrait

Financial investments in art are not always a pretty picture.  A portrait of Mick Jagger painted by Andy Warhol sold for $1.1m this quarter. The seller bought it in 2006 for $1.5m.

Old masterpieces are less vulnerable. A painting by J.M.W. Turner, “The Temple of Jupiter”, sold for $12.9m last quarter, and brought a solid return of 10 per cent a year for the seller, who bought it in 1982 for $1.1m, an exception to the rule.

The Mei Moses Art Index, co-founded by Michael Moses, tracks art values over time. The overall index declined 4.8 per cent last year. But this year, art prices have fallen 35 per cent in the first quarter alone.

That’s bad news for collectors and some universities, such as Brandeis University in Waltham, MA.  Many universities own valuable art collections and some are inclined to offset losses in other areas by liquidating those assets.  Brandeis decided to convert its on-campus Rose Museum into a student art center and divest some of its high priced paintings.  Only with values down, now is not a very favorable time to sell.

The worst year on record for art investors was 1991, when prices dropped 41 per cent, said Mr Moses, who has collected data going back to the 1800s.  Since that time the art market has tended to reflect the state of the overall economy.

G20 and Beyond: “Signs of Green Shoots Raise Hopes”

At the site of the G20 Summit, the Financial Times of London reports that “Scattered signs of green shoots in the global economy are raising hopes that the recession could bottom out later this year, paving the way for economic recovery in 2010.”

However, the signs remain tentative. Economists warn that recessions rarely proceed in straight lines and false dawns are common before recovery finally takes hold.

Surveys of business sentiment round the world, particularly in the manufacturing sector, suggest conditions are less bad than they were a few months ago although still bad by historical standards.

In the US, economists point to surprisingly solid retail sales, which suggest consumer spending grew by more than 1 per cent in the first quarter. US home sales look to be bottoming, although house prices remain in rapid decline at least on some measures.
Learn more about when the recesssion will end