Monday links: Refinance

Today's PF news
The White House Unveils Initiative To Help 'Underwater' Homeowners (forbes)

Links to get smarter
Knowing When to Refinance (nytimes)
Refinancing plan won't help housing market (cnnmoney)
Will New Lending Program Raise Rates? (smartmoney)

Thursday PF links

Sock Away $17,000 In Your 401(k) For 2012 (forbes)

Brace yourself for holiday airfare hikes (marketwatch)

Flexible-Spending Accounts: Worth the Hassle? (smartmoney)

Retirement: How to craft your own annuity

Sidestep insurers, build your own annuity and keep control of your money.

Do-It-Yourself Annuities: A Blueprint (SmartMoney)

Personal finance: How to cope with market volatility

Useful lessons to be gleaned from the way ultrarich families cope with investments and market volatility.

Lessons on Investing From America's Richest Family (wsj)

Taxes: Converting to a Roth retirement account

As I scan the web for timely, insightful personal finance articles, sometimes a topic will be trending, which adds some credibility to the advice offered.  Here is another writer saying it's a good time to consider a Roth conversion for your IRA or 401k.  (See Aug 5 post for another take on this topic).

Save on Taxes with a Roth Conversion Right Now (dailyfinance)

Education: Does class size really matter?

Today's link provides a break from the market gyrations around the economy, ratings downgrade, double dip, debt ceiling, gridlock, indigestion theme. If you are a parent of school age children, and you want them to have as good or better opportunities than you did growing up, you probably are keenly interested in their class size as the next school year is just weeks away (summer goes by fast!).  Here is a great read that reviews the recent research and thought leadership on class size and impact on a child's learning.

Does class size really matter?  (Salon)

Investing: The ghosts of 2008

Did the market crash of 2008 change a generation of investors?  Interesting take from the field of "neurofinance" on how that panic influences market actions today, like the current volatility experienced last week and this week.

Pressing All the Buttons for a Panic Attack (nyt)

Investing: Market slide strategies

Forbes can have some pretty insightful columnists. Here are few weighing in on what to do in the middle of this dramatic market correction:

Smart Moves For Battered IRAs
Use Market Crash To Bail From Burned Out Shelters?
How to Escape from a Bear

Personal Finance: Debt deal and you

The dust is settling a bit from the self inflicted debt crisis in Washington. How does the compromise affect you?

How the Debt Deal May Affect You (SmartMoney)

Loans: Why mortgage closing costs are rising

A couple articles today reporting on how closing costs for a mortgage have been going up the last couple years.  They explain that the mortgage industry has new costs to adhere to the new financial regulations in place to prevent a future meltdown, which of course are they are passing to the home buyer/refinancer.

Buying a home may be cheaper these days, but the cost of closing on a mortgage has increased in most states (bankrate)
Why Mortgage Closing Costs Are Rising and How You Can Protect Yourself (creditsesame)

Taking a few days off

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No posts for the next week.  Gone fishing.

Investing: Upside risk

Individual investors typically understand investment risk as risk of losing a lot of money.  Today, the blog presents two recent articles for investors to consider the opposite risk they assume when their focus is mostly on downside, i.e., upside risk.  "As financial advisors know, a client may think he is avoiding risk by leaving his money in a money market fund—he has certainly reduced the risk to his principal—but he has effectively traded one type of risk for another" (from the first link below)


Smart Risk Taking: Realigning Client Portfolios with Their Long-Term Goals (American Century Investments study pdf)
How the individual investor can trade like a pro (Dash of Insight)

Insurance: Extended warranties - yea or nay?

You just bought the appliance, or the shiny new gadget, or the car. Now the salesperson is offering an extended warranty on the product. A couple recent articles on this topic with the general advice to avoid them. Save your insurance dollars to protect against catastrophic losses, and pay for the occasional repair. If they were money losers for the manufacturer or retailer, they would stop selling them.

Saying No To Service Plans (Palisades Hudson Financial Group)
Extended Warranties: Deal or no Deal? (Fox Business)

Personal Finance: U.S. default and main street

Just like the whole Greek debt drama a few weeks back, the whole high stakes game of chicken on the debt ceiling going on in Washington is not arcane economics.  Default will have significant impact on everybody, and Ezra Klein at the washington post tries to explain how.

How default would harm homeowners, cities, businesses and everyone else (washington post)

Insurance: When your health insurer denies coverage

The health issue is enough to be concerned with, so when a health insurer denies coverage for a claim, that is just a very unwelcome situation to also have to handle. Today's link, from the nytimes, is steps to take to give you a better chance in appealing the decision, from the co-founder of Health Advocate, "a business that helps people who get their insurance through their employer navigate dealings with their insurance company."

7 Steps in Appealing a Health Insurance Denial (nytimes)

Investing - ETFs fieldguide

Have you ever wanted to consider a sector ETF, but feel overwhelmed at the selection and have no idea how to compare different ones in that sector?  Today's links are to the ETF Digest, which has been running a series on top 10 ETFs "that matter and may not be repetitive" in many sectors.  The series may be ongoing at ETF Digest, so all sectors may not be reflected in the below set.

Technology
Alt Energy
Energy
Financial
Small/Mid-Cap
Large/All-Cap
Dividend
Bond, Muni, Preferred 
High Yield, Emerging Market Bond
Govt, Inflation Protected Bond
Corporate Bond
Retail

Retirement: Optimal equity exposure to mitigate longevity risk

This Monday's link is a study on stock allocations in retirement and risk of running out of funds before you die (longevity risk). It is one of the main risks to manage.  According to Putnam, your equity exposure should be no more than 25% which is more conservative than most studies I've seen.

Marketwatch writeup of the report.  Key snippet, "In an interview, Harlow noted that once a retiree starts taking money from their retirement accounts, the withdrawals become “path dependent.” And if the success of a retirement income plan rests on whether the markets go up or down, one has to figure out how to protect oneself against that volatility, and especially against the risk of unfavorable “sequence of returns.” And the best way to do that is by reducing one’s overall exposure to equity to no more than 25%, he said."

Actual report is here (putnam website)

Inertia and your 401(k)

Inertia can be good and bad.  If inaction causes desired behavior, then inertia is positive. When your employer automatically signs you up to save for retirement via the 401(k) and places the savings in an age-appropriately allocated portfolio, that's a good thing.  However, if they set aside too little, you may not be saving sufficiently for your retirement, and that's probably not a good thing.  If you are at an employer, with an automatic feature for the 401(k), check your automatic savings defaults at your employer, don't rely on inertia.  See if you need to take some additional action.

401(k) Law Suppresses Saving for Retirement (wsj)

Vexing mortgage question 2: Should you payoff the mortgage?

Lots of web discussion and opinion on this one.  The Get Rich Slowly blog recently revisited the topic and got lots of reader reaction.  Paying it off early versus investing the funds is "like choosing between an apple and an orange...they're both good"

Vexing mortgage question 1: Should you refinance?

Mortgage rates are low these days. Today's link is one mortgage loan officer's take on the question, should you refinance.  His take is pretty simple,  no break-even points to consider.  If you can save money with no costs, say "yes." (hsh.com)

Auto Insurance: Shopping around? Check out Amica

The JD Power annual auto insurance satisfaction survey is out.  Overall top pick is Amica...again. 12th straight year. A great run, like UCLA under Wooden. Other insurers also worth mentioning - if price is your top criteria, Ameriprise.  Erie Insurance also ranks very high for pricing and customer service, if you are in one of the states where they offer insurance.

JD Power's 2011 National Auto Insurance Study

If you aren't shopping around right now, don't let your policy lapse with your insurer in hopes of savings some money by picking it up a little later. Bad move says an Insurance.com study.

Investing: The four scenarios driving the markets now

Investors are in a market that is currently being driven by bets on the outcomes of four main global scenarios, according to today's link. For risk management purposes, traders keep their eyes and their portfolios consistent with their views on how these four events will play out. While everyday folks are not global macro traders, it's an interesting read because your portfolio can be significantly impacted based on what happens.

The four really big global events (Institutional Investor)

Insurance: Summer vacation season...car rentals...the scary insurance pitch

It's summer vacation season.  And if you need to rent a car, your probably not looking forward to trying to make snap decisions on all the pitches of the guy at the counter (esp. that scary pitch for the car rental insurance).  It's probably because you're not sure if you're getting ripped off, or you're already covered by your credit card or your auto policy.  Take a few moments to get more knowledgeable.

Rental car insurance:  Is it worth the price? (Fox Business)
Confessions of a rental car agent (Edmunds)

Today, renting a car can expose you to every ill known to consumers (Consumer Reports)

bloomberg

Personal Finance: Credit score surprises

A roundup of some recent links that discuss your credit score and ways you may be inadvertently hurting it and credit card balance pay down strategies to improve it.

Don't rent a car with your debit card - and others [walletpop]
Don't dispute a credit card bill when you're in the market for a loan - and others [more walletpop]
Alternate credit card balance pay off strategies [mint]

Conversations with super wealthy people

Some interesting philosophical gleanings on work and money from Barry Ritholz's conversations over the years with some of his High Net Worth clients.

Don't become "cash rich" and "time poor" and 6 other learnings (wapo)

Remodeling instead of moving

Today's link is for homeowners in the early stages of considering a remodel. Given the housing downturn that shows little signs of abating, more homeowners are needing or choosing to remodel instead of trading up to a home that more meets their current situation (why is here and here).

How to choose a general contractor (nytimes)

Retirement Planning: 411 on 401(k) loans

Today's post links you to 2 informative articles about taking a loan from a 401(k).  With credit from traditional loan sources harder to obtain, this is something the press is reporting as increasing in popularity.  If you really need immediate funds, tapping your retirement account is a viable option to consider.  But these articles also lay out some cautions.

A lender of last resort—your 401(k) plan (wsj)

The two biggest traps behind 401(k) loans and how to avoid them (forbes)

Investments: Greek debt 101

These days it seems like the Greek debt situation is controlling the markets.  Sometimes it's hard to understand why seemingly obscure developments have such a large impact.  Here are two links that help bring some clarity.

The big picture (fortune)

How to position our own portfolios (smartmoney)

Congratulations graduates - now what's all the studying worth?

Fascinating study from Georgetown University that quantifies the earnings power of specific undergraduate majors.  For new Psych and Social Work majors, which score the lowest median earnings, of course college is more than just securing future earnings.  For Tiger Moms where the paycheck is king, start steering your kid into Petroleum Engineering.

Congratulations graduates - now start paying back your loans

Class of 2011, most indebted ever (wsj).  In you are in this class, here are tips on keeping your pile o' debt under control.