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1
Are Your Investments Insured?
2
Education Loans Jeopardized by Auction-Rate Securities Market Meltdown
3
Using Exchange Traded Funds – Part 2
4
Using Exchange Traded Funds – Part 1
5
Tax Breaks Tucked into the Latest Housing Bill

Are Your Investments Insured?

Are your Investments Insured?Generally speaking, investments held in brokerage accounts are insured by an agency called the Securities Investor Protection Corporation (SIPC).  The SIPC is a quasi-governmental body under the oversight of the SEC.  The SIPC is definitely not the brokerage version of the FDIC.

Although the SIPC does not have the regulatory power of the FDIC, it does have one similar function: it insures assets held at all SEC-registered brokerages.  When a broker-dealer fails, the SIPC manages the distribution of investors’ assets.  If any assets are missing, the SIPC replaces insured securities up to the insurance limits.

There are many kinds …

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Education Loans Jeopardized by Auction-Rate Securities Market Meltdown

Education Loans Jeopoardized by Auction Rate SecuritiesThe Massachusetts Educational Financing Authority (MEFA) announced late last month that it’s unable to raise funds needed to provide fixed-rate private education loans, as it has in the past. Families counting on MEFA loans will be scrambling to find other funds in the next few weeks unless a plan proposed by Governor Deval Patrick succeeds. At the end of the post I offer some last-minute ideas for families who will be facing a funding crunch if MEFA loans do not come through this fall.

MEFA provided loans to 40,000 Bay State residents last year, but its revenue-raising ability has …

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Using Exchange Traded Funds – Part 2

Today’s post continues Part 1 with a further explanation of this rapidly-growing alternative to the mutual fund. In my initial post I explained that ETFs

  • are created by financial institutions in large blocks that can be freely converted into underlying securities
  • are transparent, meaning that the underlying securities are publicly disclosed on a continuous basis
  • trade continuously on financial exchanges at prices that generally move closely with the underlying securities
  • are generally liquid, reflecting the liquidity of the underlying securities
  • are usually (but not necessarily) linked to a securities index
  • tend to have low management costs

These are generalizations, and …

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Using Exchange Traded Funds – Part 1

In the last four years or so, there has been explosion of newly created exchange traded funds (ETFs) in the financial marketplace. What are these investment products, and how are they different from the more familiar mutual funds?

Figure 1 shows the growth in both the number of exchange traded funds available and the amount of money invested in them.  Although the ETF world is still dwarfed by the $11 trillion mutual fund industry, ETFs have clearly taken off on a growth spurt.  Exchange traded funds were originally introduced to provide an investment vehicle with certain advantages over mutual funds.…

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Tax Breaks Tucked into the Latest Housing Bill

Tax Breaks in the Latest Housing BillThe Senate bill passed today provides aid for homeowners on the brink of foreclosure, relief for beleaguered mortgage finance firms Fannie Mae and Freddie Mac, and something else: tax breaks for first-time homebuyers and a deduction for homeowners who normally aren’t able to itemize their deductions.

For 2008 only, the bill provides that homeowners who don’t itemize will receive an extra deduction for a maximum of $500 or $1,000 for single or married filers, respectively.  The deduction will be based on property taxes paid.  An estimated one-half of homeowners don’t itemize – presumably because their mortgages are paid off …

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