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January 29, 2015

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Letter to the editor:

Not everyone likes using computers

In response to the letter from Beverly Frase about buying bonds for children: I can no longer buy them at the bank. Therefore, I’ve quit purchasing them for my grandson. You must buy them by computer now.

I am not versed in computer skills (I’m 75), so I no longer purchase them. I sure wish I could just go to the bank as I used to, to get them.

Who decided everyone should own and know how to operate a computer?

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  1. The answer, at least for U.S. Savings Bonds, is an easy one: The Government. The reason is one of practicality. Buying U.S. Savings bonds at the current interest rates are not a competitive long term investment, despite your patriotism for wanting to do so.

    Carmine D

  2. Carmine is absolutely correct. If you want to do something for your grandchildren by them high quality dividend paying stocks and have the dividends reinvested. Savings bonds are a horrendous investment.

    A buck invested in long-term treasuries 100 years ago is worth about $100 today.

    A dollar invested in the stock market is worth $28,000 today. Never buy bonds for children!

  3. Not really correct, Gerry. A good many dollars invested in the stock market 100 years ago fell to zero less than 20 years later. Of those that DID survive their first 20 years, a goodly number fell to zero in the subsequent 80 years. By far the greatest majority of both groups remain at zero today. Hundred year old treasuries are at least worth SOMETHING today. Any investment advice must include a mandatory warning to balance desired safety against desired return and both against desired level of oversight.

  4. It's a shame that anyone considers herself too old to take full advantage of the greatest advance in human knowledge since the invention of the printing press.

    I hope someone reading this online will pass along to Ms. Matteson that UNLV's Division of Continuing Education has a course in personal computers designed for people who have absolutely no experience. She can reach them at (702) 895-3394.

    Individual stocks come and go. The market has NEVER fallen to zero.
    long-term compounded stock market returns are beyond staggering when you factor reinvested dividends.

  6. Robert and Gerry:

    Take a time period of 20, 50, 100 years and compare any basket of personal investments [Treasuries, bonds, stocks, commodities, whatever of your choice] at the start and end. Then tell us what had the better rate of return during the entire period. If it's not the U.S. stock market, I would be very surprised. Sure if you use the October 1929, October 1987 stock market crashes as your end points, the bonds and Treasuries would be the winners. BUT if you use the average rate of the return during the economic period, it's the stock market. Most financial advisors would tell you and show you so.

    I agree that for private investors a range of investments like stocks, bonds and Treasuries are the best mix for the long term. Not because one is better than the other, but because overall they provide a level risk of certainty to investors regardless of the economic times.

    Carmine D

  7. Zippert1 (gerry hageman) REf your comment "Individual stocks come and go. The market has NEVER fallen to zero." Both comments are very true. BUT about the only way to invest in the MARKET rather than in a select group of individual stocks is to go with a full index fund. Minor problem - you specify a time period of 100 years. The first index fund seems to have been First Index Investment Trust and that dates only to December 1975.

    Carmine: Gerry's parameters were 1) the market - not a select group of stocks and 2) a period of 100 years. That is what I specifically addressed. Yes, it is possible for one individual to do better - but NOT over that time period. There's the minor problem of "life span."

    Buying to hold for 100 years probably won't do so much for return. Treasuries would probably do better and their safety is higher. Successive people buying for high security won't do so hot, either, but better than buy and hold. In most cases, this approach probably means investing in treasuries. Successive people buying for ROR has the best chance of maximizing return, but also the best chance of minimizing return because of the higher level of risk - depends on the ability of those people to second-guess (excuse me: to read or predict...) the market.

    I'll close with the same bit I did last time: ANY investment advice must include a mandatory warning to balance desired safety against desired return and both against desired level of oversight.

  8. "Carmine: Gerry's parameters were 1) the market - not a select group of stocks"


    The DOW Jones Industrial average which is the stock market index is a measure of 30 stocks and has always been. The mix of the 30 has changed over time but still always a select group which reflect the overall business strength of the economy.

    Carmine D

  9. Savings bonds for children were the investment tool of the past.Times have changed and so have saving plans for children and grandchildren.

    One of the best saving tools that parents and grandparents can use today is called the 529 plan, better known as Education IRA . The funds that are put in through the years for our children to be used in time for college. Can be withdrawn tax free when they are used for education purposes. That means that as long as the children remain in college they can take out needed expenses without a tax consequence. If children are not interested in going to college the funds can still be taken out,but a tax will have to be paid on any withdraws that are made.

    This program beats savings bonds hands down with a better return ,depending on how the money is invested. A brokerage firm is one of the best ways to go. Saving bonds when cashed will face a tax due at that time.

  10. Carmine: As you pointed out, the Dow is comprised of 30 companies and is, in your own words, "a select group." What about the other 1306 members (since 1953) of the NYSE? Being "... a select group of stocks", by NO definition does the Dow comprise "the market." It's a no more than a statistical convenience. There is yet another problem, the NYSE itself is actually "...a select group of stocks." It lists ONLY the stocks issued by its members. What about the NASDAQ, or Tokyo, or London, or Hong Kong, etc. etc. etc.? Since you have recently claimed to be an economist, I would expect you to know better.

    Granted, I believe that Gerry was probably referring to the NYSE as "the market" not to the actual world-wide market of stocks issued.

  11. Robert:

    The posts on this thread were about investments of U.S. Savings bonds compared to other U.S. investments [like stocks, corporate bonds and Treasuries]. As an economist, therefore, I ruled out global markets and stuck with the U.S. only. Why? For the most part Americans can't invest in global markets unless they do so through ADR's [American Drawing Rights]. Most small, private investors don't. Typically when referring to "stock market return" in the U.S.A, the DOW indices have always been used. However, in recent years, the NASDAQ has matched and even beaten the DOW Jones [NYSE] in total companies traded, invested capital amounts, and indices' watching and significance.

    Carmine D

  12. BTW, Robert, I call them American Drawing Rights [ADR]. ADR's are also called American Depositary Receipts and Special Rights.

    Carmine D