Monday, November 13, 2006

7 Foolish Financial Moves from WSJ

Life insurance for toddlers? Low insurance deductible for your car? Mindless investing of retirement funds? Those are a few of the "Seven Wonders of Financial Foolishness," by Jonathan Clements in Today's Wall Street Journal.

In the article Clements points out:

*Folly: Roughly 36 percent of workers take a pass on company retirement plans.

"To make matters worse, these employees are likely passing up free money. Many 401(k)s match employee contributions at a rate of, say, 50 cents on the $1. If you don't put in your $1, you don't get the free 50 cents from your employer." --WSJ

*Folly: Liquidating retirement accounts before age 60. My bad. Stupid move. Enuf said. Learn from my mistakes.

"Cashing out the account before age 59½. That not only takes a big chunk out of your nest egg, but also it triggers income taxes and usually a tax penalty as well." -- WSJ

*Folly: Low deductible on car or home insurance policy. That's one financial mistake that we have not made: Our old van has a very high deductible. Why pay for small-ticket dents that we can pay ourselves?

"There is no point in having low deductibles on your auto and homeowner's policies. If you put a $700 ding in your car, you can probably cover the cost fairly easily out of your own pocket, so there really isn't much point in paying an insurer to shoulder this risk." -- WSJ

Here's the link to the complete article.


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