Straight Talk from Al Jacobs

INTEREST IS RISING

 

Though it’s been rumored interest on savings accounts will remain in the cellar indefinitely, it appears certain select banks are offering more attractive rates than we’ve seen for many years. The increases are not dramatic, by any means, and the terms being tied to the higher rates are fraught with conditions, but the signs are unmistakable: At long last firms are willing to compete – at least to a limited extent – for depositors’ money.

 

The particular newspaper ad I spotted, with the heading “GREAT CD RATES,” was placed by HAB Bank, with local offices in Artesia California. With a minimum deposit of $1,500, a depositor can obtain an annual percentage rate (APR) of 2.48% for a 24-month CD or 2.68% for one of 36 months. You might note, HAB is not a California bank. It’s headquartered in New York and is listed as the 38th largest bank in the state of New York as well as the 521st largest in the nation. So, as you see, this is no major banking institution competing for funds … but perhaps it’s a straw in the wind. Why my attention was specifically drawn to this ad is because, in following these CD offerings as I’ve been doing, this is the highest APR I’ve yet seen, with the previous high about three months ago being 2.25%. I’m anxious to see where we go from here.

 

There was a time, not many years ago, when money could be deposited with a bank at a rate of five percent per annum, or perhaps a bit greater. Thanks to the federal government’s FDIC guarantee, it was thoroughly safe, so that many a retiree came to rely upon this as the bonus they needed to augment their Social Security and pension payments, together with any other dribs and drabs which kept them financially afloat. During the past ten years or so we Americans have been deprived of this option. It’s been tough slogging for many oldsters and I’m convinced that if the major banks have their way nothing will change.

 

With that said, let me offer a prediction. With the recent relaxation of the Dodd Frank 2010 legislation, together with the desire by the many remaining community banks to resume full banking capability, there’ll be a demand for depositors’ funds once again. And with this demand will come a willingness to offer a fair interest rate to those depositors … and although reluctantly, by the major banks as well. Within a reasonable period we’ll quite likely see the five percent interest rate return.

 

 

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com

 

 

Straight Talk from Al Jacobs

 

VIEWS OF THE HOMELESS

 

As perceived by California Lieutenant Governor Gavin Newsom, candidate for governor, there’s a “lack of leadership” in addressing homelessness at the state level. He vows he’s prepared to “get deeply involved at a granular level where most governors haven’t in the past.”  He added that “I want to be held accountable on this issue, and I want to be disruptive of the status quo. I’m willing to take risks. I’m not here to be loved. What’s going on is unacceptable, and it is inhumane.” As part of a broad strategy he took as San Francisco Mayor, he pledges to end chronic homelessness by developing housing and family reunification programs for those living outside the longest.

 

Through the eyes of State Senate Pro Tem Kevin de León, candidate for the U.S. Senate, California must adopt a philosophy for treating homelessness he refers to as “housing first” – a recovery-oriented approach to end homelessness centering on quickly moving people experiencing homelessness into independent and permanent housing and then providing additional supports and services as needed. His support for a homeless housing program originated in January 2016 when he proposed a $2-billion bond to finance new and rehabilitated housing for mentally ill people living on the streets. As he said, “It makes no sense to provide social services, only for them to go live behind an alley or in a cardboard box.”

 

As seen by Los Angeles Mayor Eric Garcetti, presidential hopeful: A “shelter crisis exists today,” he claims, “for the estimated 25,237 unsheltered homeless who call the city home.” He claims the city will ease or eliminate restriction on homeless shelters, allowing them to be quickly built on land owned or leased by the city. The mayor also announced the inclusion of $20 million in his proposed 2018-19 budget to help fund new shelter facilities. As Garcetti said, “This is the right thing to do. It’s the moral thing to do.”

 

As viewed by Jon Johannessen, a local resident who must live in the beleaguered community of Venice, California: “Boo [to them all] for failing to understand. There is no ‘homeless’ problem. Instead there are mentally ill people listlessly wandering the streets in rags. There are drug-addled screamers raging at life day and night. There are ‘street people’ who accept money and services from our government but have no intention of ever working. This cannot be solved with temporary shelters.”

 

 

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com

 

Straight Talk from Al Jacobs

 

ADVICE TO INVESTORS

 

For those of you who’ve been paying attention, the securities market has experienced considerable volatility these past several weeks. The three major stock indices – DJIA, NASDAQ & S&P 500 – have all incurred notable one-day increases and declines. And as is conventional, within hours of the close of the market each day, financial commentators and analysts began to offer their interpretations and recommendations. If there’s a single piece of advice which is repeated over and over, it’s that investors should be cautious.

 

Ah, yes … cautious. I’ve been listening to economic advisors repeat that catechism for more years than I can remember. That an investor must be cautious, regardless of market fluctuations, is obvious. Actually I can’t think of many endeavors in which we participate wherein the exercise of caution is not advisable. Nonetheless, the implication seems to be that, barring some bizarre circumstance, caution is not worth mentioning.

 

But along with the standard exhortation, there’s one matter the pundits will not address. You’ll receive no explanation on how to exercise caution, nor suggestions as to actions you might take in an uncertain market, as if a market were ever certain.  Hmm … but let me renege a bit. You’ll receive a bit more than just a suggestion. You’ll be given a recommendation that the way to exercise caution will be to subscribe to an advisory service. And as you might expect, the particular service recommended will invariably be the one offered by the individual who is at that moment is advocating you be cautious. So to solve the problem you need merely click the hyperlink, provide your credit card number, and your uncertainties will be alleviated.

 

And in view of all this, do I have any suggestions to offer? More specifically, what helpful advice can I provide when the market becomes volatile to ensure you’ll not become a victim of a rapidly declining portfolio of securities? Why isn’t it obvious what my recommendation will be? I will, of course, naturally stress that whatever may be the uncertainties you experience or the circumstances you face, that above all you should be cautious.

 

 

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com

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Straight Talk from Al Jacobs

 

STUDENT DEBT IS A WASTE

 

A recent headline is ominous: “Student Loan Debt Now Mammoth.” A majority of undergrads are taking on debt to attend college, some of it massive. Examples of students’ financial misfortunes are described, but it’s the article’s final sentence that leaves me confused: “The big question now is what, if anything, we can do about it.”

 

I’m not certain who we are. Am I, a self-financed graduate, one of we? Are parents who paid for their children’s schooling part of we? More specifically, why should the collective we do anything about it when a college education is for the direct benefit of a specific recipient? This is a problem for the student and family to resolve, not we.

 

Now that I’ve disavowed all personal responsibility for educating millions of people I don’t know, I’ll explain how each student can earn a diploma without going into hock. I subscribe to the principle of college-on-the-cheap. The first two years of post-secondary education, the freshman and sophomore years, are pursued at a local community college. The next two years, as a junior and senior, are earned at a state university. Tuition charges vary with each state, but legal residents generally enjoy low preferential rates. The annual tuition for a full academic load at the California State University system is currently in the range of $6,600 plus about $800 in various fees.

 

I’m convinced that two years at a local community college followed by the junior and senior years at a reasonably priced state university is the way to go. This is because scholastic benefit depends more upon the student’s efforts than anything else. I’ll share my personal bias with you. Unless you or your parents have more money than you know what to do with, attendance at an acclaimed university represents an unwarranted expense. The time will come when your textbooks have been sold, your course notes burned, the names of your instructors forgotten, and your framed diploma relegated to a wall at which you rarely glance. At that point your education is what’s left in your head. That’s what really counts.

As a final thought, I disagree with those critics who contend that a degree from an institution without an exalted reputation will forever stigmatize its holder. To you, I pose this question: Do you actually know from what schools your dentist, attorney, accountant, and physician received their bachelors’ degrees?

 

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com

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