If you invest $1.00 at 5% and let it run for 50 years, it would have grown to $11.00+, without allowing for the erosion of your income, whether annually or after a period of years, several times, by income tax, or the ongoing erosion in value of your asset by inflation. If, however, you could invest it at 10%, after that same 50 year period it would have grown to $117.00+. Your investment could lose 3/4 of its value and still come out ahead of having invested it at 5%. Actually, more than that - for it's the value after taxes and inflation that really counts. Do you expect that companies like Exxon, Gillette, Coca Cola, and such, or other major petroleum, pipeline companies, etc. may go out of business? Or even suffer serious losses. A person who invests a major portion of his (probably less likely "her", cause women generally are more risk-averse and less likely to plunge; [some would say, "smarter"]) total invested asset into highly speculative issues seems to me to have cheese for brains. The stock markets as a whole have average growth of 7 - 8% or so, over the long term. Few mutual fund managers' holdings have grown faster. And they charge fees for their expertise - somewhere between 1 - 2% in the U.S. for equity (i.e. stock market based) funds, most of them over 2% annually in Canada. If they match the long-term average growth of the market ... they're reaping about a fifth to a quarter of the growth, a larger proportion in Canada. Unfortunately, if there is no growth - they still get their percentage. Many persons calling themselves financial planners/advisors are actually mutual fund sales people: that's all the equity-related financial issues that they're licensed to sell. They don't want to talk to you about individual stocks, for they can't sell them and it's illegal for them to recommend them unless they've taken the courses that stockbrokers take (which few have - their courses are much less complex). There are a few who sell no financial products, but many of them stop doing that because often their income levels are much lower, despite many people who want to invest saying that they'd really love independent advice. One should investigate what kind of training a prospective personal financial advisor has taken and whether s/he has advanced courses above the minimum requirements. Also what kind and length of experience the prospective advisor has. Also what lifestle experience the prospect has: some have seen a great deal more of life than others - and have learned much more per year than many who have lived as many years. Finally - you need a person whose personality and ideas are compatible with yours. You will trust that person with a very important part of your life. Some years ago, when I had a display at a county fall fair, someone asked me what right I had to call myself a financial planner. I said that we could get rid of unemployment tomorrow - we need only have every unemployed person put out a shingle on his front lawn calling himself a financial planner, as it was unregulated - any darn fool could do it. Stock brokers were regulated, as were mutual fund salespeople, but in our area at that time financial planners were not, as there were few of them operating outside of stockbrokerage and mutual fund sales agencies. That's not the case now - but it would be a good idea to ask several of them what kind of regulations there are governing them. I took the course that stockbrokers take, over 20 years ago and worked for a mutual fund sales brokerage (i.e. they could offer mutual funds managed by a large number of managers, rather than only funds managed by their own company). I didn't produce enough sales to suit them, so was there for only one year. I'm more tuned into the idea of helping people set their financial goals, look at some concepts that they might not have thought of, and work toward achieving them. I am totally devoted to helping my clients decide what they want to achieve and start out on a plan of how to achieve that/those goals. They don't have to be concerned that my advice or recommendations may be slanted toward various financial products that I just happen to sell, for I don't sell any. One local person that I met a few years ago said that he'd done well in business and managing his investments, so some friends asked him to manage some money for them. He asked for a minimum investment of $10,000., asked the client to sign a power of attorney for that account only, and when he made decisions about investments, a copy of the confirmation went to the client and one to him. He charged 10% of the growth (exclusive of dividends, if I remember correctly). Rather a good idea, for if he doesn't produce, he doesn't get paid. There is a fairly major proviso, though - that he might choose some fairly risky investments where there could well be a possibility of major gain. He being a person of integrity, I think that he was quite strongly guided by the level of risk that his clients were willing to tolerate. When I asked what happened if there were no gain - he said that there hadn't been a year yet that he hadn't been able to send a request for payment to every client. I'm not sure how many years the concept had been in operation. This has been rather off topic - sorry about that. As for many people lacking time to manage their investments ... ... many people spend more time on consideration of where they'll go for a two week vacation than they do on an investment system that may well be in place for forty years (or more). Good wishes for making your money work well for you - rather than better for someone else. joyful guy

Hi krycek, You may be very well correct for people who don't save, typically overspend, and aren't very concerned or serious about their money. These are the folks who *NEED* to listen to the beginners messages by the likes of Suze Ormond & Dave Ramsey. Paying the more expensive premium for a 30 FRM is a good thing for the "minimum payment, set it & forget it" crowd. I always advise folks that; The SAFEST and FINANCIALLY SUREST strategy is to accumulate a Mortgage Freedom Account (safe, liquid, compounding growth funds) that you can CHOOSE to use to wipe out the entire mortgage balance all at once when you are ready. Earning a safe compounding return that outperforms the tax-deductible costs of mortgage leverage is not difficult *IF* you match timeframes (i.e. don't try to match the costs of 30 year leverage with 6 month or 12 month deposit commitments. Long term matches long term, etc.) Of course, once you have reached this point, you also have the power & discretion to safely "let the mortgage balance ride" with absolutely no risk (since you can stroke a check to wipe it out at will) while you continue to earn more in compounding growth than you pay in tax-deductible interest (not to mention the insurance premium savings you get when you have plenty of cash & can take larger deductibles.) A 5 yr ARM is going for 2.75% currently (no buydown points.) A 30 FRM is going for 3.875% currently (no buydown points.) That's a 40% cost PREMIUM for anyone taking a 30 FRM. If you did nothing but took the savings and applied it to principal (the least effective strategy... but still,) *AND the interest rate market went "limit up" (meaning it adjusted as high as legally allowed each year after the fixed period,) you would STILL pay less with the 5 yr ARM than the 30 FRM for at least 7-8 years. If the interest rate markets do *ANYTHING* milder than the absolute catastrophic worst... you save with the 5 yr ARM deeper, and longer... allowing you to apply that savings to debt elimination and safe, liquid savings the entire time. For *MOST* of my clients, I can design a plan that will allow them to retire all their debt (consumer *AND* mortgage) in 9-10 years, even if they are paying the premium on a 30 FRM. If we go with the 5 yr ARM savings instead, we can often retire all debts in 5-7 years. (OH... and that is WITHOUT reducing their lifestyle budgets... no distasteful "belt cinching" required, assuming responsible folks in the first place.) IMPORTANT NOTE: FannieMae bond data (in their SEC reports) whow that 19 out of every 20 mortgages are paid off due to refi or re-sale by just UNDER the 7th year. Since the 5 yr ARM (in a WORST CASE situation) is better for 7-8 years, THAT MEANS that 95% of the people who pay a premium for the 30 FRM are flushing that extra money down the toilet... all because of emotional fear, or lack of understanding. DISCLAIMER: although I do provide this for my clients... I also teach the principles in various posts & responses here for everyone, for free. Those who "get it" either apply it for themselves, or they contact me... and I love it just as much when folks tell me of their successes from reading my works as I do when they hire our firm. The better you understand the realities of money, interest rates, protective periods, protective caps, and the realities of the bonds markets (which tell us indisputably how frequently loans turn over,) the better you can get out of debt, and into financial freedom. Cheers, Dave Donhoff Leverage Planner

As a resident of the Great, Benighted North-east ... let me ask ... anyone for conservation of energy? When my power went off - I went to my provincial gov't. rep's office to give him H-E double toothpicks. Due to traffic tie-up arrived 5 min. after closing (I think) but they were open. Couldn't afford to give him too much of a piece of my mind - conservation of mental capacity, don't you know. En route home, directed traffic for a while at substantial intersection in rush hour. Several said, "Thanks" or waved - one said, "Get off the street"! Several civilians in Toronto did likewise, we're told. Visited 87 yr. old uncle living alone after recent death of wife who, despite painful back, hip, leg insists on keeping some beef cattle, got candles out for him, showed him how to use battery radio (that he didn't know he had - I'd stayed with him for a while after his wife died last year). Glad I recently bought batteries for my $1.00-at-garage-sale radio. National broadcaster ran advice about need to turn everything off that we could, to reduce surge when reconnecting, and province-wide phone-in to share ideas. I pulled fuses from water heater connection - haven't replaced them yet, as they say we need severe conservation measures, at present, to avoid rolling blackouts. Shaved in reasonably hot water Sat. morning. Haven't bathed since - imagine I smell by now (but I live alone). Hope I don't suffer blackout right now, or I lose all my writing here. A guy called about 10:30 to cry about 400 lb. of meat that he had (perhaps fresh? which would mean that his window of opportunity to save it would be reduced over if it were frozen). I began calling with suggestions for him, in dark for a while until power returned about 11 - I was without for 7 hours only - plus a short interruption later. Line busy til 4 a.m. I suggested he find a van or pickup, load his freezer, put meat in, take substantial lunch, head for nearest rural area, go door-to-door asking for generator. I was sure he wouldn't go three miles till found farmer willing to fire up generator, freeze his meat. Lunch so he could stick around for repeat every half day or so, as needed, till power returned at his home. Lunch optional - most (traditional) farmers wouldn't see him go hungry. Twice in recent years I took portable generators to areas blacked out due to ice storm - once 500 miles away. I goofed Thursday evening - didn't get on phone to friends seeking generator. When I did, Fr. morning, couldn't locate one. Think I should try to compile database of generators possibly available and persons with major freezer stock - homeowners, small stores, etc. not hard-wired, with 220 volt systems, etc. in preparation for such an eventuality in future. One generator can travel from site to site to serve possibly a couple of dozen freezers - perhaps half an hour each, twice daily or less, depending on outside temp. Invite those of you with time, energy available in your area to do likewise. We've been asked to shut down all unnecessary power consuming systems, e.g. signage, billboards. Local grocery in plaza shut down lights in parking lot. Many non-essential govt offices told to stay closed and asking factories and commerce to try to keep consumption to half of normal usage for about a week. Can't understand how Times Square figures it should be lit as usual. Do they want to be shut down - again? They say that it's to be hotter and more humid during the next few days. Hope you don't suffer Benightedhood too often! joyful guy

About 30 years ago, when I sold mutual funds for a year, some folks, especially elders, chortled that they'd been receiving a really great return on their GICs, bonds, etc. (Canada Savings Bonds offered 19% that year). They were full of disbelief when I told them that they'd actually earned peanuts, as interest earnings are taxed at top rate, with no credits, that if they were in 25% tax rate, that'd take their 19% or so down to about 14% plus a bit after-tax ... ... and did they know what inflation rate was, at the time? Many didn't know that it was about 12%. When you buy a bond for $100.00 which will pay you $100.00 at maturity, several years down the road, that $100.00 will buy a lot less than when you bought the bond ... so you must put part of the earnings back with the basic fund in order to keep up your purchasing power. When you have 14% or so after-tax, and you add 12% to the basic kitty to keep up with inflation ... you're not getting to keep very much. On the other hand ... a couple of years ago I visited a local Member of Parliament's office to ask them whether they knew how our central banks and governments were shooting a lot of citizens in the foot, especially seniors? When I can only collect 2% interest on a GIC, bond, etc., and that interest is taxed at top rate, with no credits available, if I'm in 25% tax rate, that takes my after-tax return down to 1.5%. When official rate of inflation is 2%, and if one has visited the stores recently, one suggests that some statistician is missing a few nuts to his bolts ... ... one ends up in the hole! As many financial advisors usually recommended putting a higher percentage of total financial assets into interest-bearing investments as one becomes advanced in age, with fewer years for market recovery in case of major drops, current rates of interest hurt such investors, especially seniors, heavily. Learning how money (and taxes) work ... an interesting hobby - that pays well! ole joyful