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Paul Merriman has identified his favorite 10 items listed in “Money” magazine’s May 2008 annual guide to the 100 best things from the past year. Paul’s interests and my own are slightly different, and Money’s list is so intriguing that I had no trouble coming up with nine additional items.
For whatever it’s worth, my list follows. Except as noted, I have not used these products or services, and I’m not personally endorsing them. (Page numbers refer to the magazine, which is probably available in most public libraries.)
1. Best hedge against recession. Cash. This is about as simple as it comes. While cash is no substitute for a good investment portfolio, emergency funds are a staple of financial planning. In uncertain times, rainy-day savings are especially important. Full disclosure: I own some cash, and I'd like to own more. (Page 96)
2. Best wine under $20. I should rush out and do my own research on this one, but I haven’t yet: Baron Philippe de Rothschild Escudo Rojo, a cabernet blend from Chile (2005) selling for $15 to $16. The most memorable wine I ever drank was a Rothschild product. Nearly 30 years later, it is still the unmatched standard in my mind. I’m looking forward to checking out this famous French family’s new venture. (Page 116)
3. Best credit card. Paul picked one (Blue Cash from American Express) that appeals to him. My favorite from Money’s list is “A local bank or credit union.” My wife and I regularly use two credit cards, which we pay off in full each month. One, issued by a large national bank, dings us with a late fee of more than $30 if a payment arrives in the mail the day after a Saturday, Sunday or holiday due date. (In other words, it’s late by definition if the bank chooses not to be there to open the envelope.) I can make a payment by phone, but I am charged $15 for doing so. What a contrast with the card issued by Boeing Employees Credit Union (membership available to any resident of Washington state as well as all Boeing employees). BECU has never charged me a late fee, even though I’ve occasionally been remiss by a week or more. Rewards come in the form of tickets on any airline to any destination, with a credit-card representative (a person you can actually talk to) making the arrangements for no charge. Last year my wife and I saved more than $2,000 on round-trip flights to Rome by redeeming points. While in Europe, we used this credit card with only minimal currency conversion charges. (Page 120)
4. Best way to fix the subprime mortgage mess. OK, here we leave the comfortable, familiar territory of products and services and get into ideas and politics. I can’t say I’m in love with any of Money’s four suggestions, but I’m intrigued by what the editors call the “most out of left field” fix, proposed by a real estate economist at Dartmouth College. The federal government would buy (I presume that means pay off) the mortgages of troubled borrowers and issue smaller mortgages to the homeowners. In return, the price of the underlying properties would forever be fixed at the smaller loan amounts. This has serious drawbacks, but it’s certainly creative. (Page 110)
5. Best car for a midlife crisis. This won’t reflect Paul Merriman’s style, or mine either, actually. But it almost makes me wish for a midlife crisis so I’d have a rationale to own a Chevrolet Corvette. The magazine makes a case for the Corvette’s economic advantages, including resale value, insurance rates compared to its competition and 26 mpg highway fuel economy. Much more sensible, and also on this list, is Toyota’s fuel-sipping Prius. Full disclosure: I’ve never owned or even driven either of these cars. But I’d like to. (Page 99)
6. Best job to have in a recession. I’m happy in my present job, but if I had to do something different and the pay didn’t matter, I’d seriously consider one of two items on Money’s list on Page 108: college professor or teacher. Teaching is what we do at FundAdvice.com, and I like this field. For satisfaction, I’d find it hard to beat the stimulation of dealing with inquisitive, smart young people. For security, you get university tenure (supposedly they can’t fire you no matter how ridiculous your words or behavior) or in the case of a public school job, extremely strong union protection. The downside could be significant. In addition to non-exciting pay, you could face the perils of entrenched bureaucracy, intramural back-stabbing and stifling political correctness. Hmm.
7. Best way to give money to charity. Not everyone will agree, but this is my list and I get to pick the items on it. “How to really help a charity” on Page 98 suggests giving one large amount to your favorite charity instead of writing small checks to lots of causes. The rationale for this will be obvious to anybody who has written $25 and $50 checks to dozens of causes: Follow-up mailings and other solicitations can cost the charities more than the value of what you gave. Put all your charitable eggs in one basket and the charitable recipient might start treating you as an important person instead of only a name on a mailing list. Full disclosure: My own favorite charity gets at least 80 percent of my donation dollars each year.
8. Best new 401(k) feature. The Roth option. For those who can afford to maximize their annual contributions with after-tax money, especially young people, this seems like a no-brainer. The future is uncertain, but I think tax rates are unlikely to be lower in the future than they are now. That means it could make sense to pay taxes up front when your tax bracket is low instead of later when it’s higher. Over the long run, I don’t believe the Roth will totally live up to its billing as tax-free forever. I have no doubt that someday Congress will find back-door ways to effectively tax withdrawals from Roth IRA and 401(k) accounts. But until that happens, a Roth lets you earn income and gains on which taxes are not merely deferred but eradicated. (Page 118)
9. Best place to buy a home. Money lists six housing markets, and if I were required to re-locate in one of them I’d choose Boston. I lived there for four years in the 1970s and have been back to visit a few times. It’s a fascinating place, filled with history, celebrities, education and culture. Money says the average home in suburban Waltham is priced at $406,000. Prices are probably lower farther out, and there’s ample public transportation for commuters. (Page 106)
I realize this is just a personal, subjective sample from Money’s list. Just about every consumer magazine publishes lists like this. It’s an easy journalistic staple that catches people’s attention and doesn’t require much mental effort from readers. Still, it’s occasionally fun to give in to list-making, and we hope you enjoy it too.
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