Author: Jeff

107, 104 and 82

The three numbers above seem arbitrary. They’re relatively small if you’re talking about dollars and cents. But what if I told you the first number (107) is the age of a new client (I’ll call her Lena for privacy’s sake) I met just before Christmas; the second number (104) was the age of Lena’s husband who died several weeks ago; and the third number (82) is the number of years they had been married at the time of the husband’s death. Just to give you more context, the longest marriage in the US lasted 83 years and the longest marriage anywhere on record is 86 years. When my assistant, Cindy, gave me the detailed phone message, I thought it was a hoax.

I was told that despite being a little hard of hearing (primarily based on her refusal to wear one of her two hearing aids), Lena was clear thinking and somewhat self-sufficient. She and her husband lived alone together in a two-story colonial up until his death. Sure enough, the person I met was a little slow of gate and a bit hard of hearing, but she followed along, asked good questions and was dressed to a T as well!

I learned some amazing things about Lena and her family. Including:

1. She and her husband played golf until he was 100 and even drove to Myrtle Beach annually to get in some golf rounds.
2. She and her sister (still alive at 102) were both original Rosie the Riveters, working in General Motors plants in Detroit making military equipment during WWII.
3. I found nothing particularly unique about her lifestyle. She was very social as was her husband, and they enjoyed an occasional cocktail and travelled extensively.

She never complained in my office or got fidgety during the hour-long session. Heck, she didn’t even need to use the bathroom after the meeting (unlike me, lol). And she told me she was as surprised as anyone by the length of her life.

Opportunities for me to cross paths with unique people like Lena are what makes my practice worthwhile. I’ve heard and witnessed great stories of commitment, perseverance, and compassion over my decades of estate and financial planning. If you’re reading this then we’ve likely sat down in my office several times over the years to “get things in order.” You, too, have given me a story, however large or small, that encouraged and/or inspired me. Thank you!

P.S. As I finished writing this it dawned on me that this could be taken as my “farewell” message. No way! I recently emblazoned three numbers in my head – 107, 104 and 82. See you soon!

Fun Fact: Rosie the Riveter wasn’t a single real person, but an iconic symbol for the millions of American women who worked in factories and shipyards during World War II, producing munitions and war supplies, with several real women inspiring the image, most notably Naomi Parker Fraley, whose photo became the basis for the famous “We Can Do It!” poster. Naomi lived to age 96.

(Almost) Everything is Negotiable

As a young lawyer I worked at the Oakland County prosecutor’s office. I had a good friend in the office by the name of Paul. He was a big Italian kid, played football at Hillsdale College and had a low gravelly voice straight out of a Mafia movie. I learned two things from Paul: use ice cold water when you make coffee (he was a connoisseur) and never forget that you can negotiate the price of just about anything.

The first time it happened it was somewhat of a shock. Paul and I were on a lunch break at a shopping mall near the courthouse looking at shoes. The price was clearly listed but when the salesperson came up, Paul slowly and calmly began to work down the price. After I watched Paul do this in several different situations, I came to realize that just about anything is negotiable.

Now, I will confess, in my younger days I could take it too far. My wife still likes to remind me about the time that I was trying to negotiate the price of a kitchen table at a furniture store. When the salesman said he could go no lower I whispered to her “let’s head for the door, they’ll stop us before we get out.” Nothing happened and out we went…without the table. I didn’t tell Paul about that one.

The cost of negotiation is in time and energy, which some people would rather avoid. But too often people hear the price and think that’s the end of the conversation. In most instances you can, in a very polite and non-stressful way, probe for a little better deal. Remember the rule: the worst they can say is no. Here are some items worth trying to negotiate:

Rent: The advertised rent of an apartment is what the landlord hopes to get. It never hurts to work for a lower amount by showing market averages or considering a longer lease. My clients who are landlords tell me that they will give reduced rent in return for people that they think will take good care of things and will make a long-term commitment.

Medical bills: People get a complicated looking bill in the mail and think that’s the end of the discussion. That’s not necessarily the case. Simply indicating that you can afford to pay immediately if they lower the price sometimes does wonders.

Subscription services: Companies providing subscription services for cell phones, cable and even XM radio don’t want you to leave. If you shop the competition and go back to your current provider with the idea that you’re thinking of leaving, you’ll be amazed on how flexible they can be in changing your bill.

Airline miles: One of my sons came home last weekend from Chicago on a Delta flight. It was the second time in a row that his flight was delayed. He went to the front desk and explained how much trouble the delay caused (twice) and was initially offered 3,000 Delta miles for his troubles. He tells me he conveyed his appreciation and told the person he thought more miles were in order based on the length of the delay. Sure enough after the attendant talked to her manager he left with 10,000 Delta miles. No yelling, just a little persistence.

Negotiating prices is out of many people’s comfort zone. You don’t have to be aggressive or disrespectful to be effective. In fact, the nicer and calmer you are the better your chances of getting someone to give you some special treatment. Just be careful in furniture stores 😊.

Fun Fact: Speaking of negotiation, a guy named Ron Cobb was hired by Steven Spielberg to direct a sequel to Close Encounters of the Third Kind, called Night Skies. Eventually, Spielberg took over the directing and changed the name to E. T. Ron Cobb was able to negotiate a single percentage point from Spielberg’s share of the deal. Based on E.T.’s success, Cobb’s first check was for over $1 million, and he continued to get checks until his death in 2020.

Three Quick Ones and a Cold Fact

I usually stick to one topic in my Up Early emails, but today I’m going to try a quick hit on three topics I’ve run across lately.

Inherited IRAs: IRAs you create yourself have one set of distribution rules. IRAs you inherit as a beneficiary have a completely different set of rules that you need to know. Most people who inherited an IRA in 2020 or later have to withdraw the full IRA balance (and pay taxes) within 10 years of the death of the original owner. You can’t wait until you are in your 70s to start to withdraw, and depending on the age of the original owner at death, you might also have Required Minimum Distributions every year up until full withdrawal in year 10. There are some very complicated exceptions to the rule above so check with your estate planning attorney, financial planner, accountant and/or the financial institution holding the inherited IRA. The RMD deadline for 2025 is fast approaching.

Gift Card Planning: According to research by Bankrate, the average American has $244 of unused gift card balances. There are also lots of folks who lost money because of expiration, a lost card or the retailer going out of business. The best defense is organization: Register your card per the instructions on the card. Take a photo of the card (front and back) and see if you can transfer the card to your virtual wallet on your phone for ease of use. While you have your phone out, set a reminder close to the expiration date so you don’t lose out. Some states have a mandatory cash back requirement once the gift card balance gets low. Michigan does not, but Michigan does have a rule banning inactivity fees and requiring a minimum 5-year expiration period.

Free Money Awaits Infants: Watch for the details of “Trump Accounts” to come out in 2026. Any child born in 2025 through 2028 is potentially eligible to receive $1,000 in seed money from the Federal Government for the account which will then grow tax-deferred until the child reaches age 18. The details of the accounts are complex, and they don’t suit everyone’s needs, but I’d much rather see some of my taxes go to funding an account for your child or grandchild then I would for some of the “projects” the government takes on.

Those are three quick topics worth considering. Be safe out there in this weather (my trip to Florida over Thanksgiving seems like a long time ago).

Fun Fact: Yes, it’s been cold. But if it will make you feel any better, the coldest day on record in Michigan was February 9, 1934, when the temperature in Vanderbilt (just north of Gaylord) dropped to -51 degrees Fahrenheit.

Greasing the Skids for Your Inheritance

That old idiom derives from a time when heavy equipment had to be transported on giant skids and using grease made it easier to transport. It also applies to preparing for what happens after you’re gone and the details of your inheritance decisions are executed. People sometimes forget that they won’t be around to clarify intentions, sooth hurt feelings and misunderstandings, or to provide advice on how best to use money bequeathed.

I once had a client who died unexpectedly in his late 50s. He was a good investor, frugal, divorced and only had one child. That child, a son, led a rather simple life. He and his wife were hourly workers. They were raising their two teenagers at the time of the death. The son instantly became a millionaire, without any knowledge of how to invest or how to prioritize spending and saving. The next time I saw the son about a year later, he “retired,” bought a new bigger home, was driving a nice big pickup and was catering events at his house for extended family and friends. Something tells me that deceased father would have liked to prepare his son a bit better for handling a seven-figure inheritance. Maybe he would have told the son to be frugal and make sure the money lasts. However, I could also envision him saying “life is short – sometimes surprisingly short, so enjoy it while you can!” All I know for sure is that he didn’t grease the skids for his son’s very heavy responsibility of managing a large investment portfolio.

Don’t let that happen to you. Here are some factors to consider so as to make things “move” easier after you are gone:

1. Make sure your financial and medical decision makers know where the estate planning documents are kept. Don’t give them copies because that creates its own set of issues if you later change the plan. Giving them the exact location of the documents, along with any code or lock combination is enough.
2. If things are not going evenly to a group of people of equal relation (e.g. kids or grandkids) let them know up front. Whether you give them a justification is up to you, (I mean, it’s your money and you really can do what you want with it), but letting them know things aren’t going to be equal helps minimize tensions and challenges later on.
3. Letting kids know how much you have is a unique issue. It’s definitely a good idea if you begin to have trouble keeping track of it and managing it. But while you are still competent, giving details of your net worth can be good or bad. My experience is that children inevitably estimate what their parents are worth, if for no other reason than to plan how to take care of them if they need nursing care. If you think they are way off, you might want to at least give some hints so they have a better perspective.
4. Letting your kids know who will be in charge as the trustee or executor is helpful. Again, hurt feelings for silly things can come out of nowhere. Your medical decision maker should also know your feelings about end-of-life care.
5. If what you leave a child or grandchild will completely change their financial status, it might be best to start coaching them a bit now about how to handle investments and the types of help they can and should get from professionals. Money can overwhelm people, and many older children might not realize that Jed Clampett and his family weren’t just millionaires, they were more like decamillionaires in today’s dollars. A million dollars is not what it used to be.

Of course, you can eliminate all of these issues if you do what I used to tell my estate planning seminar attendees decades ago: Time things carefully so that the check to the undertaker bounces! Good luck with that!

Fun Fact: I was in Southwest Florida for Thanksgiving visiting family (and golfing, of course) and we visited the Thomas Edison museum. Edison and Henry Ford had winter homes in Ft. Myers. An inventor as prolific as Thomas Edison had to be an optimist. Among his 1,093 patents was the lightbulb, and it was a bumpy road to discovery. Ever the optimist, Edison used to describe his initial lightbulb failures as “discovering thousands of ways it did not work.”

Your Brain Needs Numbers

Like many, I’m hopelessly dependent on my iPhone, and one of my most-used apps is the Hewlett Packard 10bii Financial Calculator. You have to really know that calculator to pass the Certified Financial Planner exams, and for good reason: It allows you to calculate cashflow and present/future value projections. The nerd in me really has a lot of fun using it, which got me thinking of the importance of numbers, and math formulas in particular, to keep our cognitive functions sharp.

Basic math can be helpful for those dealing with dementia as well. Puzzles like Sudoku encourage the brain to work through logic and memory issues. Sudoku is a number puzzle and the gameboard can be designed for all levels of difficulty; from very easy for those with some cognitive issues, to very difficult for those ready for the challenge. A math puzzle like Sudoku is like a bench press for the brain.

Not long ago I started setting my calculator down and attempting to write out some basic math formulas just to get back in the swing. It is both amazing and embarrassing as to how much I forgot. Here are a few math tricks to motivate you to set down the calculator occasionally:

1. When multiplying a 2-digit number by 11, place the sum of the 2 digits between those digits to get the answer. 45 x 11 (4+5 = 9), so 495 is the answer.  It works with any 2-digit number multiplied by 11.  If the sum of the numbers is 10 or more, it still works, but you add the first digits, place the second digit of the answer in the middle… and remember to carry the 1; 56 x 11 (5+6 = 11, carry the 1, 5+1 = 6), so 616 is the answer.
2. When trying to figure out a percentage of a number, try reversing the percentage number.  What’s 18% of 50? Reverse to 50% of 18. 1/2 of 18 is 9. 18% of 50 = 9.  4% of 75 is the same as 75% of 4 which is 3/4 of 4 = 3.  4% of 75 = 3.
3. Here’s a party trick: Pick any number between 1 and 9. Now multiply that number by 9. Now add the digits together. The answer will always be…9!
4. Finally, here’s a practical trick that helps with your finances. It’s the Rule of 72. If you want to know how many years it will take to double your money at any fixed interest rate, just divide 72 by your interest rate number. (10% interest rate – 72 divided by 10 = 7.2 years.  3% interest rate – 72 divided by 3 = 24 years).

Playing around with numbers is fun and good for your brain, even if you aren’t as mentally quick as you used to be. Have some fun with numbers and your brain will thank you.

Fun fact: The longest mathematical equation is the solution to the Boolean Pythagorean Triples problem (you know the one 😊). The proof is 200 terabytes in size, and it took a supercomputer to generate. A single terabyte is “one million million.”

You Need to Have a Word With Your Family

Here’s a true story: Several years ago, my mother was sitting in her home (probably watching one of her favorite suspense shows) when her cell phone rang. On the other end of the line was an attorney who needed my mother’s help. He was representing one of her grandchildren who was incarcerated on a drunk driving charge and was too embarrassed to tell his parents what happened. He needed $5,000 immediately to get out of jail and have legal representation. At the time my mother could narrow down the possible grandchildren based upon who was old enough to drive and which one didn’t have a lawyer for a father, and sure enough the lawyer confirmed that the first grandchild’s name she threw out was in fact the one in trouble.

My late mother adored her grandchildren and would do anything for them, including pay to get them out of a jam. So, she went back and forth through a few phone calls with the attorney to make sure she know how to write the check and where to overnight it. She was all set and on her way to the post office when her husband, my stepfather, asked her to run this situation by me (the lawyer 😊). She did, and I immediately knew the whole thing was a scam. No troubled grandchild, no real attorney, and no need for $5,000. Just a sophisticated plot to scam grandparents out of money based on trust and emotion. I even called the predator once I got involved and trust me, I had no effect on him. He just hung up, and I’m sure began working on another unsuspecting grandparent.

The story above happened several years ago, and now with AI, predators can be even more sophisticated. For example, they could review an online video of a person, say someone’s grandchild giving a presentation, and use it to mimic the exact voice of the grandchild to the unsuspecting relative. These types of AI scams are already happening, and they will just get worse.

One very effective solution to consider is a family “code word.” Everyone in your immediate family should memorize just one word and then, if grandma receives a call from someone claiming to be her grandson, she can ask for the code word. If it can’t be produced, then she should hang up. Simple but effective. An article in the Wall Street Journal last week gave some good suggestions on how to pick a code word. Here they are:

1. Make it simple but strong. Don’t use your dog’s name or even your wife’s maiden name because lots of personal family information is accessible by criminals on the internet. Perhaps you could use something based on a family joke or even a phrase that family members always laugh at.
2. Keep it safe. If you are worried you will forget it, write it down or store it on a password manager. If you write it down, put it in a safe place so a visitor can’t easily see it.
3. Keep the circle small. The more family members who know the code word, the more chance that it gets stolen. Parents, kids and grandchildren is a good group.
4. Think outside the box. The code could also be a question, like what was the name of our neighbor who lived across from us growing up.

My mother dodged a bullet, but many people don’t realize they are being scammed until it’s too late. Make sure you and your family take the time to protect yourselves.

Fun Fact: The bloodhound is known to have the best sense of smell among canines. Originally bred to hunt deer and wild boar, they are now used by police and rescue teams. Bloodhounds have been known to follow a scent for over 130 miles, providing not only a strong nose, but a tenacious character as well. The most famous bloodhound was named Nick Carter, a canine detective credited with solving over 600 cases in the early 1900s. He once followed the scent of a missing 6-year-old girl for over 5 miles through fields and streams and led authorities straight to her.

Supercalifragilisticexpialidocious

Did you know that’s a real word? Look it up. It’s been used so much since it was introduced in the 1964 Disney musical film Mary Poppins that it made its way into formal lexicon. According to the Cambridge Dictionary it means “extremely good” – and that’s what financial life has been like for stock investors the last few years. I wouldn’t be surprised to hear someone humming that delightful song after taking a peek at their investment gains recently.

But let me also point out a phrase from the opening scene of the movie Mary Poppins. The London chimney sweep Bert (brilliantly played by Dick Van Dyke) abruptly stops his song and dance in the park, looks up to the sky with a quizzical expression and says: “Wind’s in the East, mist coming in; like something is brewing, and ‘bout to begin…”  (Bert’s quote to be continued below).

Something is indeed brewing in all sorts of assets…speculation. Gold, bitcoin and, yes, stocks are all reaching record setting values. As we all know, nothing goes up forever and there are a few interesting signs that values are getting ahead of themselves. By way of example:

1. A graph of the average YTD performance of companies shows that the highest returns (34%) have been from companies listed on the Nasdaq with no (read that as “0”) revenue. That means companies with apparent potential, but no profit to show for it, are going up in value the fastest.
2. That same graph also shows the average YTD return for money losing companies on the Nasdaq is 18%. Apparently, these money losers are sought after for their potential, too.
3. The concentration in the S&P 500 Index is increasing dramatically. There are around 500 companies that make up the S&P 500, but 39% of the total value of that index is made up of just 10 tech stocks. That index has never had so few stocks make up such a great amount of its total value.
4. One day last week when the Nasdaq Index as a whole was up 0.6% to a new all-time high, there were actually 2 times more companies that were down for the day than up. The smaller number of companies that went up more than made up for the vastly larger number of companies that went down. When that happens, we call it a lack of breadth in the market and it has not happened to that extent since 2021, just before a market correction.
5. I’ll stop with the above, but understand this list could keep going, and include the government shutdown, China, war in Ukraine, and so on.

Believe it or not, the information above is not intended to scare you. It’s intended to condition you so that you are ready—intellectually and emotionally—for the inevitable. Sooner or later—and I honestly have no idea when—the stock market as a whole will drop to lower values. It could come tomorrow, and/or it could not come for months or years, but it is indeed coming. I say that with confidence because, well, market corrections always come, especially after valuations get ahead of themselves.

If you are a committed long-term investor, you will be ready for the market drop, and you will, with the help of your seasoned advisor, stay the course with your investment plan that (hopefully) is tailored just for you — in good times and in bad. Great companies have always sustained their inevitable march toward your financial goals. Sometimes they march up big mountains of gains (like today) and sometimes they march down vast valleys of market drops, but the market has always slowly and inevitably marched forward, led by great companies in great capitalistic systems.

Look, the market on average is down 10% every 19 months, and down 20% once every 6-10 years. We are due, even without the factors described above. The real issue isn’t the market, it’s whether you will do something silly (like abandon your investment plan) when that happens. There are lots of investor newbies now jumping into the market like there’s no tomorrow. Many of them have never really lived through a market correction and they will cut and run at the first sign of trouble.

When the heavy weather does indeed come and the urge to head for the door is whispering in your ear, harken back to the beginning of Mary Poppins and remember the rest of Bert’s line: “…can’t put me finger on what lies in store, but I feel what’s to happen, all happened before.” Nothing here is new. Get in the right state of mind to be a successful investor.

Fun Fact: If you ever used the monorail system at Disney you might be interested to know that the success of the hit movie Mary Poppins funded its development. The system is named MAPO (MAry POppins) in honor of the film.

Can Someone Really Steal My Home?

Since today is Halloween I thought I’d lead with a scary question, and it’s one I hear a lot more often these days, especially now that your TV is filled with ads targeting homeowners with just that claim. Should you be concerned – yes. Should you be scared – no. Here’s what I can tell you:

1. Ownership of real estate in Michigan is established by a legal document called a deed. The seller/transferor of the property signs a deed that “transfers” his or her interest in the real estate to the new buyer/transferee. You can imagine the confusion and problems with these deeds if they get lost or destroyed. “Who owns the property” can become a nightmare without the deed. Enter the county Register of Deeds which keeps a record of all deeds that are sent to them for recording.  The Register of Deeds is supposed to review the deed for many things, including accuracy of property description and ownership. Staffing issues and electronic recording make the accuracy checks more challenging.
2. When you buy real estate you want to make sure the seller is legitimate. Enter title insurance, which is what a buyer pays for so that a title company covers the risk of a problem, like a prior deed that was improperly drafted or an undisclosed lien on the property. Title insurance typically covers the buyer up to the point of closing, but not too long after that. A fraudulent title transfer years after the sale will not be covered by the title insurance policy that covered the closing date.
3. So, can someone take ownership of your home without you knowing it? The short answer is no, not legally. But someone can claim to be you and forge your signature on a deed and then try to record it. Heck, in the world we live in anything is possible.

Before you start to sweat, know that while on the rise, fraudulent deed transfers are still fairly rare, and often happen with properties that are neglected. Still, there are things to know to protect yourself.

1. A new Michigan law (MCL 565.371) will help deter fraudulent deed transfers. It is now a felony to draft or record a deed with intent to deceive anyone about the validity of the document. In addition, the law empowers the county Register of Deeds to refer questionable documents to the county prosecutor for investigation.
2. You can check the status of the deed to your home by visiting your county Register of Deeds office to request the most recently recorded deed. Some Register of Deeds office (Oakland and Macomb, for example) also provide a very good online deed search service or a way to request a notice if a document is filed on your property or in your name. Check your county’s website.
3. An existing mortgage can make a deed transfer more challenging because the mortgage is recorded and a payoff and release is typically required on a deed transfer.
4. Real estate ownership usually has bills associated with the property, including utilities and property taxes. If you stop getting bills or see a different name on the bill, you should look into the matter.
5. Of course, the big question people want to know is should they pay for some type of title monitoring. Like any service, it will depend on what you get for your money. I will point you to the Federal Trade Commission Consumer Protection website to review the August 26, 2024, article: Home title lock insurance? Not a lock at all | Consumer Advice. From what I read there, the main point of the alert is to remind consumers that you aren’t getting insurance that will reimburse you, but a monitoring system that proports to alert you after the fact about a deed filing. I am unaware of any of these services being able to prevent a transfer before it happens. If you are considering a service, ask the following questions:
   1. How do you monitor?
   2. How frequently do you monitor?
   3. What are you monitoring for?
   4. How and when will you let me know about an issue?
   5. What will you do to help me if a fraudulent deed is recorded?

Identity theft is on the rise everywhere, including in the area of real estate ownership. You need to be alert. I don’t have an opinion as whether you should buy a third-party monitoring service because I don’t use one myself, but I do know there are some effective ways to monitor your deed on your own and I hope this helps you to better understand your options.

Fun Fact: The Rüppell’s Griffon Vulture is the highest-flying bird, known to have reached an altitude of 37,000 feet (over seven miles!). How do we know this you might ask? Because one collided with an aircraft at that altitude in 1973 and damaged the engine. After the plane landed they identified the remains as the Griffon Vulture.

Debit Card v. Credit Card-What’s Best for You?

You have two big options when it comes to the plastic card we all pull out of our wallets to pay for things. They all might have 16-digit card numbers and expiration dates, but one big difference relates to whether using it creates a loan or a direct withdrawal from your bank account.

Credit cards allow you to borrow money from the credit card company, up to a certain limit, to purchase items or pay for services. When you use a credit card you are getting an interest free 30-day loan from the credit card issuer. If you don’t pay it back in full by the next billing deadline, then interest begins to accumulate on the unpaid balance.

Debit cards allow you to spend money directly out of your bank account, and thus the transaction causes an immediate deduction to your bank balance. There is no borrowing involved when you use your debit card. If your bank account doesn’t immediately have funds to cover the transaction, either the purchase won’t go through, or you will be subject to overdraft fees on the account.

Which card type if best for you? It depends on what you deem to be important. Here are the factors:

1. If you want to build a credit history to enhance your credit report, then the credit card helps. On-time payments, low credit utilization ratios (i.e. relatively small purchases compared to your limit) help build your credit score…but the opposite is also true. If you are late on payments or max out the card frequently your credit score will take a hit. Debit cards have no effect on your credit score because they are direct payments from your bank account.
2. If you want guardrails for your spending, then a debit card is the way to go because you can only spend what’s in the account (or be subject to overdraft fees). Because it’s a loan, you don’t have to consider how much you have in the bank when you whip out a credit card. Some people get into financial trouble and high interest debt with a credit card. That’s difficult to do with a debit card.
3. If you want the option to dispute a purchase after the fact, the credit card wins. The Fair Credit Billing Act allows credit card users to dispute purchases through the credit card company. With a debit card, the money is out of your account by the time you put the debit card back in your wallet, and you have to get the merchant to reverse the transaction — Not so easy.
4. Fraud protection is important. Credit cards always had the advantage here, but more debit card companies are starting to add fraud protection, too. However, since a debit card is linked directly to your bank account, a fraudulent purchase can immediately drain your account while credit card fraud has no immediate impact on your bank account because you pay for it later.
5. Debit cards don’t have an annual fee while credit cards do. But credit cards offer cash back rewards while debit cards have much more limited cash benefits. This one’s a toss-up.

There is no right answer in the debit card vs. credit card debate. It all depends on what factors are most important to you. I hope the factors above help in deciding what’s best for you.

Fun Fact: Halloween pumpkins derived from Irish immigrants. Irish folklore includes the story of “Stingy Jack” who when he died was not allowed into Heaven or Hell and so he wanders the earth for eternity. To keep him away from their homes, people in Ireland would carve scary faces out of turnips to display. When Irish immigrants moved to America, they found pumpkins more prevalent and bigger to carve on, so they started using them to carve “jack-o’-lanterns” to ward off souls trapped between worlds as well as evil spirits.

All I See Is Gold

The words above are often attributed to Egyptologist Howard Carter when, on November 26, 1922, he first peered into the tomb of Tutankhamun. It’s not really what he said (see the Fun Fact below) but the phrase stuck because of our fascination with that mystical precious metal.

Gold has always been the talk of high society, but recently it has become the talk of the financial media, primarily because of the over 50% price run up this year to over $4,000 an ounce. You know things are getting wild when the Wall Street Journal writes about a California welder who has taken up prospecting for gold — complete with metal detector, pick and shovel.

Should you have gold as part of your investment strategy? There’s no simple answer. Although I do have an opinion that I will share. First, let’s be clear about some facts about gold:

1. Not all “gold” is the same. There are two categories: bullion and collectible coins. Bullion can be bars or coins, but the only value is in the gold itself as determined by its weight. Collectible coins can have a value over their weight in gold because of the history and rarity of a particular coin.
2. Actual physical gold is a pain in the neck to store and keep safe, for obvious reasons.
3. Physical gold is not so easy to turn into cash. You just can’t hand it to a banker and get paid the spot price (the current market price) in crisp new bills. You must go through a gold dealer, who will give you (sometimes much) less than the spot price because he or she needs to make a profit on the resale. In addition, physical gold appreciation can be taxed as a collectible at a 28% tax rate, which is higher than the typical 20% capital gains tax rate.
4. You don’t have to own physical gold to get some investment exposure. There are gold ETFs, which are investments that represent a specific amount of gold and the ETF fund itself stores and protects the physical gold. For those folks who want gold in their safe just in case Armageddon arrives, the ETF doesn’t cut mustard. If you’re just looking for a convenient way to get some gold investment exposure, then the ETF route can make sense.

Here’s my opinion on gold as part of your investment strategy. It’s hard for me to get my arms around calling gold an investment because it doesn’t produce anything. No profit sharing, no dividends, no interest. It just sits there, and when people find a reason to be more scared than usual (right now it’s the fear of the US dollar’s crumbling international reputation) than there’s a very human reaction to rush for gold, and thus demand peaks. When the crisis subsides, so does demand and thus the price of gold.

In fact, in the last 45 years, gold ($800/oz in 1980) has gone up 5X while the standard inflation measure has gone up 4.14X. Gold has barely risen faster than inflation, and if not for the huge run up in the last 10 months it would not have a stellar track record against inflation over the last 45 years. Stocks, as represented by the S&P 500 have gone up 62X during that same period. Is there really any question as to the better inflation hedge?

Let me conclude with a real-life scenario. My wife and I do own physical gold – 10 one oz coins that my father-in-law gave to us decades ago. I store them in a safe spot but still get nervous about them from time to time. I guess I can value them at $40,000 for the moment. I always joke that if the world goes crazy, I will cut each coin into quarters so we can buy food and gas–but I will likely never spend them. I don’t really need the value for support, and they have a sentimental value to my wife. We will probably give them to our kids or grandkids as gifts years from now…and then they will hold them for decades until they do the same. Gold…fun and interesting to hold? – definitely. An important part of your investment portfolio? – Not in my book.

Fun Fact: When British Egyptologist Howard Carter first opened King Tut’s tomb and pushed his candle inside his assistant asked, “Can you see anything?” Carter paused for a time to let his eyes adjust to the darkness and then said “Yes, wonderful things!” There was surely lots of gold, including a gold death mask currently valued at $2 million and a gold coffin valued at $1.7 million. The collection is insured for over $900 million dollars. Tutankhamun became king at age 9 and died at age 19.