Cedar Rapids Gazette (Newspaper) - November 1, 1974, Cedar Rapids, Iowa
The Cedar Rapids Gazette: Fri., Nov. I, 1974
The Investor’s Guide
By Sam Shulsky
Q — We're retired and wondering whether it would be
cheaper for us to rent.
A — Obviously, without knowing any of the financial
details, there is no way for me to even guess.
Putting aside any tax savings derived from interest paid on a mortgage and from real estate tazes, I think a fair rule of thumb is that ownership of a house costs you roughly IO percent of its market value annually.
If you own a $40. (HH) home, free and clear, you must add the earning power of that $40,000 to the expenditure of taxes, water. insurance, heading, repairs. Since money today can earn about 9 percent, taxable, from highest quality bonds and, say, 8 percent from tax-exempts, one can see that the $40,000 could bring in $2,400 a year, clear — or $3,000 taxable. To that add the other expenses and it should bt' obvious that your “rent" runs to about $4,000 or even more.
If there is a mortgage on the house, your equity, of course, is lower, and so would bt' the amount your equity could earn for you. But then, you must add in the mortgage interest.
Q — I'm attracted to a stock which sells for oui) a couple
of dollars but has a dividend of “HO t " This would seem to be a very high return.
A — It isn t. In my records that “t" stands for the market value of a stock dividend. A stock dividend is nothing more than a slicing up of what you already own into smaller pieces. It isn’t even “ice in the winter time."
Q — As far back as I can recall, financial experts have
talked of common stock as an inflation hedge. For the past year or so. this has not been true.
A — Correction: It has not been true for the last six to
For the period 1945-58, stock market appreciation ran far ahead of inflation — and again from 1957 to 1981: and from 1983 to 1988.
If you look at the market charts for, let’s say, 1982 or 1966. or 1969-70 and again from the start of 1973 to the present, you will see that stock prices fell all the time the cost of living was rising Some “days” it doesn’t pay to get out of bed
Q — I would like income from my E bonds. Should I
convert to II bonds, or cash in the Es?
A — If you switch to H bonds you will receive annually,
on a 10-year average, 8 percent of the full present value of your E bonds. This income will be subject only to federal income taxes. If you cash in part of the Es every year you will pay a federal tax on the accrued interest included in the cash-in price. If you cash in all the E bonds you will be subj€»ct to a federal tax on all the interest accrued.
By Anderson A Looming
"You don't have to put my slippers on for me, Marmaduke. Bringing them is enough!"
13th Senatorial District
JIM REDMOND:Advocate of the best for Iowans
• Eastern Iowa Native • law and Chemical Engineering Degrees
• law Clerk, Iowa Supreme Court • Cedar Rapids legal Staff
• low Enforcement Instructor (Kirkwood) • Navy Veteran
Paid for by REDMOND FOR STATE SENATE Joan long, Chairperson
Only your accountant can tell you which is the best policy for you.
Q — I’ve heard that seme brokers are %?ffering bank notes
paying IO to ll percent for six months.
A — I don't know to what you are referring But it ought
to be made clear that yields are given on an annual basis — not for six months. Many good quality bonds today are yielding around the 9-10 percent level.
Q — I obtained H bonds by turning in F bonds. There is a
figure* — $1,488 — written on the face of the bond How does this affect taxes?
A — The $l,4§8 represents the accrued interest In the E
bonds — on which you paid no income taxes. This tax liability is carried over onto the II bonds — bul you need not pay any tax on that accrued E bond interest until you redeem the ll bonds or they mature And that could be a long, long time off
Q — You talk about the safety of I S. treasury bonds.
What is the collateral behind them?
A — You and I and about 2(H) million other citizens of the
* * *
Mr. Shulsky welcomes written Questions but he will be able to provide an swers only through the column For Information to check on obsolete securities. Diease Include o self addressed, stamped envelope Address your request to Sam Shulsky, care of The Gazette
Music Prevents Vote on Mayor
FLORENCE, Italy (UPI) -An orchestra playing full force prevented the Florence city council from electing a new mayor
Tilt* council convened to elect a successor to Giancarlo Zoli, who resigned as mayor because of differences over Socialist demands for collaboration with the Communist party.
The debate never got under way. An orchestra in the council hall drowned out all speakers and Zoli postponed the session indefinitely.
Musicians explained they were members of the association for the spreading of musical culture and the concert was a protest against insufficient government subsidies which may force the association to fold.
ON THIS DATE in 1969, the Supreme Judicial court of Massachusetts granted U.S. Sen. Edward Kennedy the right to a closed inquest in the drowning of his car passenger. Mary Jo Kopechne
The Employment Center Is In Classified
Arenounce* txcMng Klwanlt
Golden Check Gift Certificate
Program Sponsored By A Group of
Over 20 Area Merchants!
Your Number May Be Called to Receive OVER
For Only $ 14
In • (Hts . Rcst.ur.nl M..I. • Mcrt.imuc.it • Smicc. • kutomottv*.» Stay clof to your phonos—your may ho co
Sponsored by the following merchants:
Real Budget stretcher!
Goodyear Sirloin N Drew Young School of Beauty Otto Shine far Washes Tonys Pizza
Circle M Hobo Cor Wash Cedar Rapids Loth 4 Key Docs Brunch 4 Lunch One Hour Martinizing Brights Piano 4 Organ
Triangle Bandog Tire Center Henrys Skate Country Coast to Coast Hardware
Country Kitchen Village Inn Pancake House
Firestone Davis Kirby Co Mr Steak
Fashion Two Twenty Cosmetics Tomon Gifts 4 Flowers Conquistador Hairstylists Vogue Studios
OR IF YOU PIFFER SEND CHECK DR MONEY ORDER TO.
Kl WANIS (XFR GOLDEN CHECKS
GI ARANTY BANK Bl UDING, IRD ST *
IRD AVE., SITTE seer
CEDAR RAPIDS. IA.U.S. Congress Increases ES.LLC InsuranceEach Savers Funds ll X
Savers, now you have an even greater opportunity to invest and earn our generous interest rates...and have your funds fully insured.
The U. S. Congress just authorized the Federal Savings and Loan Insurance Corporation to increase the insurance of each savers funds from $2().(XK) to $40,(XX). No saver has ever lost a dollar in a sa' ngs account insured by this permanent U. S. Government Agency.
These Associations, as members of the FSLIC.are able to give your funds this increased protection... at no cost to you. Through the use of multiple ownership of savings accounts: two people can now invest with one insured savings association up to $2(X).(XX); a family of four can invest up to $560,000; all fully protected under FSLIC insurance.
Today is a good time to review your savings and investments of family cash reserves. You have a newly increased opportunity to earn top yields with every dollar insured safe.
This new emblem signifies increased protection by a permanent agency of the U. S. Government.
Savings protection increased 100% by Federal Savings and Loan Insurance Corporation.
Federal Savings & Loan Insurance Corp.
Your Savings Insured to $40,000
SAVINGS AND LOAN ASSOCIATION CEDAR RAPIDS. IOWA 52407
DOWNTOWN OFFICE: 11O Second Ave., S.E.-Tel. 366-1851 LINDALE PLAcjA OFFICE: Lindale Plaza Shopping Center-Tel, 393-7700 IOWA CITY OFFICE: I 32 E. Washington-Tel. 338-9751