Being Rich Now Apparently Is Harder Than Ever

The Wall Street Journal Wealth Report Blog is reporting that the new thing to do if you're mega wealthy is to have a "family office" to manage your investments, real estate, charitable giving, and travel.  I can't speak from experience, because I'm unfortunately no where near the $100 million dollar mark the article states is the sweet spot for this type of arrangement.  

But, aside from the cachet that having an "office" full of people who report to your every whim and desire -- does having a family office really offer much?  Sounds like this arrangement just brings all the people that average folks already use and brings them in house.  Normal people have accountants, attorneys, bankers, financial planners... and sometimes trust officers or assistants/secretaries.  Anyways, I thought the article was interesting and wanted to pass it on, you can read the entire story over at the WSJ Wealth Blog.

Photo Credit: risastla @ flickr

Link:  WSJ Wealth Blog

Oil Falls Sharply... For Once

Today a couple interesting things happened in the markets that have been rare occurrences in the markets.  For starters the NYSE rallied up more than 200 points (of course it later gave the gains back and then some which is not all that unusual of late).  Also, oil fell to $105 per barrel before settling back just under $110 per barrel.  Third, the dollar ended slightly stronger rising .8% to 1.4501 dollars per euro.  Don't get too excited about a bottom or that we're out of the woods yet.  Come next week it will probably again be "Oil rose on fears of _______ (insert war in a little known country, natural disaster somewhere without running water or any other reason you'd like).  

While the relief in oil prices is great, consumers probably won't see relief at the pump here until refiners ramp up capacity or the vertically integrated oil companies start taking a smaller cut over every step of the supply chain (unlikely to say the least).

Photo Credit: freewine @ flickr

Stats:  Oil Price Plunge @ NYTIMES

The Credit Crunch Now Effecting Individual Credit Scores

As if steadily increasing foreclosure rates and falling home values weren't enough, the subprime mess has begun to spill over into other areas of the financial sector. Credit card issuers are now starting to get their risk exposure in check (which would otherwise be a good thing), but if issuers cut down credit limits substantially consumers could be effected in an unintended way.

FICO scores - individual credit score that gives lenders a rough estimate of how much of a risk you are - are based in part on your credit utilization rate. This means, if a credit card issuer cuts your available credit in half, that will have an effect on your utilization rate -- at FICO score as a whole. For example, say you have a credit card balance of $4,000 and credit line of $10,000, if Discover drops your credit line to $5,000. Assuming you have no other cards, your utilization ratio has rose from 40% to 80% overnight. Additionally, card issuers have begun to raise interest rates from bad to ugly. You already know this -- but, there's even more incentive now to pay down credit card debt. Unless you have some payday or auto title loans floating around, the credit card debt should be priority #1. There are few other investments that you can make a 29% return on your investment, and that doesn't even include fees that card issuers tack on each month.

It should be noted, that credit utilization accounts for about 30% of your FICO score. The most important factor in your credit score remains your payment history, which makes up 35%. The rest of your score is calculated by weighting your credit history (15%), types of credit (10%), and new credit (10%).

Are CT Scans a Rip Off?

The N.Y. Times posted an interesting article yesterday about whether CT scans, the costly high tech imaging machines that let Dr's see inside your body, are worth the money -- and the risks.

As a disclaimer: I'm sure that the scans offer real benefits in certain circumstances, but I thought it was interesting to see a major daily start a discussion about their merits.

As a quick summary, the story says that more than 150,000 were given last year grossing over $100 mln for for doctors and hospitals. The problem it seems is two fold: 1) many doctors and doctor's groups are investing $1 mln dollars or more in the machines, and 2) the doctors then have a direct incentive to pay down the debt that the machine has created. The Times story also says that the tests run anywhere from $500-$1,000, don't necessarily offer any benefits over old tests, and subject the patient to large doses of radiation.

Maybe this isn't interesting to anyone else out there, but it just goes to show you have to be ready to ask questions when you go into the hospital -- something that isn't always well received depending on what level of care you are getting.

What Are You Doing To Beat Inflation?

Energy prices are skyrocketing, food prices are through the roof, seems like everything is costing more these days -- and the thing is -- you're right. Most of us have been effected in one way or another by the rising energy costs, but what about your nest egg. What approaches are you taking to make sure that inflation isn't eating away at your savings and still mitigating some of the risk in your portfolio?

Since most people underestimate the real rate of inflation (and the U.S. Government claims inflation is now at approximately 2%), this doesn't garner much attention - but it's a real concern. I typically steer clear of any type of investment advice here on this site, but want to open it up for discussion since it's something I've been thinking about lately.

Among the many options - Treasury Inflation Protected Bond Funds have become trendy of late [see ETF's: TIP, IPE ; MUTFunds: VIPSX, DIPSX, FINPX), and so have dividend weighted ETF's [see ETF's: PEY, DLS]

What do you think? Are inflation protected bonds the way to go? Dividend paying stocks? Cash?