All the Serious Money is Indexed

A recent New York Times article discussed how index funds are not only the most efficient way for people of modest means to accumulate wealth but are also the best way for wealthy investors to keep and grow their wealth.

The reporter interviewed Princeton professor of economics Burton Malkiel, author of the 1973 investment classic "A Random Walk Down Wall Street" and pioneer in research which shed light on the folly of trying to beat the market. In the article he postulated that of all of the mutual funds in existence or created since the 1970s, the number that actually beat the broad indexes through 2009 would be in the single digits.

The counterpoints in the article from some active managers border on laughable. One compared stocks to baseball batters, saying "If you find the ones with the higher average, you're adding real value." Well no kidding...except that study after study shows that the odds of doing that are about the same as the odds of any single person reading this becoming an American Idol winner.

The same manager also said "We're selecting high-quality companies with earnings streams and eliminating all the bad stocks in the S&P that you have to own because it's an index." Apparently they're buying those great stocks from other active managers who prefer low-quality companies without earnings streams. (Remember they're not buying them from those silly indexers, because the indexers own a proportionate share of everything in the market.)

Malkiel also dispels the notion that commodities belong in a portfolio as a distinct asset class, because by properly diversifying one already has such exposure: "...if you're really well diversified and into emerging markets you're going to have some investments in Brazil, which is natural resource rich. It's simple."

Malkiel also divulges his personal holdings, which include buying some individual stocks "because it's fun. All the serious money is indexed."

How to Stop Collection Agency Calls

(This is a guest article by Garrett Driscoll*)

Debt collectors can be very difficult to deal with. They get paid based on their ability to collect a debt, so they have a pretty big incentive to get the money owed. Creditors (like credit card companies, mortgage holders, etc) outsource these debt collections to collection agencies. These agencies get paid based on what they collect, so they are determined to get that fee. I've recently read that in one instance a collector called a debtor at work 80 times in 1 day. Sometimes a collector's efforts to collect a debt can turn into harassment. This is why you need to know your legal rights.

Fortunately, there are government protections against harassment from any type of debt collector, lawyer, or collection agency. A law called the Fair Debt Collection Practices Act was created to stop unwanted disturbances from collectors. The FDCPA covers personal, family, and household debts like credit card, medical, and mortgage debt. There are certain rules that these collection agencies need to abide by or they are in breach of the law. If they break these laws you can even seek punitive damages against them.

These rules are:

1. They can only contact you between 8 A.M and 9 P.M. local time.


2. They aren't allow to contact you at a time that is inconvenient to you.(such as at work)


3. Threaten to contact people about your debts, such as your boss or neighbors.


4. They cannot misrepresent themselves to be a government agent or employee or a credit bureau.


5. They may also not collect any type of fee or interest on top of the debt that you owe.

The easiest way to get a collector to stop calling you is to send them a letter stating you would like them to cease communication with you. This is called a "cease and desist" letter. After you send them this letter they are allowed to contact you only if: the collection efforts are stopping, or that the collector is going to take certain actions (like proceed with a lawsuit). If they contact you further they are violating the FDCPA. You can even take legal active if these violations are significant.

Make sure and send your cease and desist letter certified mail. This way you can prove that the collector received the letter. This will be important in the future in case you are still receiving harassing phone calls. You definitely should start a file and record the date and times of your communications with the collector. Be sure and photocopy all letters and correspondence with the agency, especially any calls or letter that sound threatening or abusive. Its important to keep a paper trail if you need to prove your case in the future.

If you feel that a collection agency has violated any laws you can report them to the FTC, you local attorney general, or even take them to court. You can sue the collector for up to $1000 in damages if you can prove their harassment led to lost wages or medical expenses. But remember if a collector breaks the law in trying to collect the debt, it still doesn't stop you from owing it.

One more way that you can completely stop collection agencies, is to declare bankruptcy. It is not the recommended method, because it will severely damage your credit score for 7 years, but it will stop all current collection efforts.

When you start chapter 7 or chapter 13 bankruptcy a process called automatic stay starts. Automatic stay will stop all creditors, lawsuits, and the foreclosure process for a period of time. This stay in effect until a judge lifts the stay, the debtor get a discharge, or the debtor no longer owns the property do to bankruptcy.

For obvious reasons you would want to avoid bankruptcy in most cases, but it is available as an option of last resort. If you are in way over your head and negotiating, settling, or managing your debt isn't an option, then you might consider bankruptcy. Otherwise, set up a monthly budget for yourself and work with your creditors. You might be surprised how much they might be able to negotiate with you if you come at them with a plan of action to get your debts paid off.

*About the author: This is a guest post by Garrett from Debt Eagle. Visit debt eagle if you need credit card debt relief. He discusses the differences between debt consolidation, debt settlement and credit counseling.


*Image Credit: Photograph by alancleaver_2000 [via Flickr Creative Commons]

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