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Mutual fund rates maginified

What a difference a percent makes. A combined attention to mutual fund quality and mutual fund costs can increase the probability of gaining that extra 1 or 2 percent annual return on your portfolio overall.

Why does such a seemingly small difference in rate of return become so important? It's the magic of compound interest over a sustained period of time that adds hundreds of thousands of extra dollars for each additional percentage point.

Investing takes sense of humor

Fewer than half of all Americans have a sense of humor. This is common knowledge in the advertising industry and explains why relatively few ads attempt to be humorous. Then there's this column.

A little humor to enliven otherwise dry subject matter can get at least half of us through the tedium of topics such as the annual portfolio rebalance.

My approach to money management has been to spread funds across a spectrum of mutual funds to achieve diversification. I periodically sell some of the winners to add to what have been the losers.

Taxes a big part of financial health

For those young graduates asking "What color is my parachute?" -- it doesn't matter. Just get a job somewhere and start experiencing the joy of making a contribution and learning the basics of money. There is no perfect job when you are first starting out. That's why it's called "work."

A young person curious about how the real world works should be asking the following:

Make nest eggs, not dynasties

Years ago, an IRS attorney explained in a speech that the "confiscatory" tax treatment of retirement-plan and IRA money upon death was "reasonable."

"Look," he said, "the government never set up these programs as a tool for creating estates that could be passed on to heirs. The intent of the legislation is to make it easier for people to provide for their own retirement income needs -- and nothing more."

Singles have some fiscal advantages

Remember the movie "The Seven Year Itch" starring Marilyn Monroe?

It brings to mind the burgeoning apartment real estate market in the early 1980s. A contributing factor to the demand for apartments was the explosion in the divorce rate of the boomer generation, whose average marriage lasted -- you guessed it -- seven years.

One house or apartment was a cozy love nest for two, but suddenly there was a need for two dwellings for a separated couple.

Life after work still needs goals

My wife and I have found that playing "high point-low point" at the end of each day is good for laughs. The object is to agree upon the best part about the day and the worst part about the day.

Retirement should be one extended high point. To live a self-indulgent, eccentric personal lifestyle should be the just deserts for a lifetime of hard work and accomplishments.

Statistics illustrate war on middle class

President Bush recently addressed a dinner group of wealthy campaign contributors by congratulating them as the "haves" and the "have mores."

The New York Times on Nov. 19 pointed out that the top 1 percent of income earners in 2004 had an average income of $940,441 -- up 57 percent from 1990. And that was after adjusting for inflation.

The bottom 90 percent, with an average income of $28,355, has seen a 2 percent inflation-adjusted increase in income during the same 14-year period.

Health care has gone crazy

A good friend mentioned the other day that an operation to repair the rotator cuff in his shoulder cost about $25,000, which was paid mostly by Blue Cross.

Then Blue Cross sent him another check for $9,000. He called to ask if there was some mistake, and was told, "No, you're covered by two policies, so you actually make money on this operation."

Higher taxes are on their way

The Wall Street Journal headline that caught my eye was "Prospect of political gridlock ignites rally."

While the "borrow-and-spend" Republicans may have been checkmated by the "tax-and-spend" Democrats, I think the gridlock started awhile ago, when the government effectively ran out of money.

Take the 700-mile border fence, for example. Although Congress voted for it with much fanfare recently, it is clear that no money has been allocated for it and probably never will.

Basics are key for financial tips

This month marks the end of another year for this column -- a total of 364 weekly diatribes stretching back over the past seven years. And no, I don't use a ghostwriter. Instead, I have a process.

I read a lot because I enjoy the world of finance. Much of my entertainment comes from the fact that truth is stranger than fiction in the world of commerce, and more often than not, we could never dream up what we get to witness. This includes both unlikely successes such as YouTube and abject failures like Enron.

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